Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) down to US$379m market cap, but institutional owners may not be as affected after a year of 5.4% returns

Key Insights

• Given the large stake in the stock by institutions, Aldeyra Therapeutics' stock price might be vulnerable to their trading decisions
• The top 5 shareholders own 53% of the company
• 20% of Aldeyra Therapeutics is held by insiders

Every investor in Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) should be aware of the most powerful shareholder groups. With 43% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Losing money on investments is something no shareholder enjoys, least of all institutional investors who saw their holdings value drop by 11% last week. Still, the 5.4% one-year gains may have helped mitigate their overall losses. But they would probably be wary of future losses.

Let's take a closer look to see what the different types of shareholders can tell us about Aldeyra Therapeutics.

Check out our latest analysis for Aldeyra Therapeutics

What Does The Institutional Ownership Tell Us About Aldeyra Therapeutics?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Aldeyra Therapeutics. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Aldeyra Therapeutics, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Aldeyra Therapeutics. Our data shows that Perceptive Advisors LLC is the largest shareholder with 19% of shares outstanding. For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 5.5% by the third-largest shareholder. Furthermore, CEO Todd Brady is the owner of 1.9% of the company's shares.

On looking further, we found that 53% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Aldeyra Therapeutics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Aldeyra Therapeutics, Inc.. It has a market capitalization of just US$379m, and insiders have US$75m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 25%, private equity firms could influence the Aldeyra Therapeutics board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Aldeyra Therapeutics better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Aldeyra Therapeutics (of which 1 is concerning!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.