Every investor in Axcella Health Inc. (NASDAQ:AXLA) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.
Axcella Health is a smaller company with a market capitalization of US$115m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let’s take a closer look to see what the different types of shareholder can tell us about Axcella Health.
View 3 warning signs we detected for Axcella Health
What Does The Institutional Ownership Tell Us About Axcella Health?
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 own 19% of Axcella Health. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Axcella Health, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in Axcella Health. Flagship Pioneering is currently the company’s largest shareholder with 38% of shares outstanding. The second and third largest shareholders are FMR LLC and Nestlé S.A., holding 15% and 8.7%, respectively.
Our analysis suggests that the top 2 shareholders collectively control 53% of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Axcella Health
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own some shares in Axcella Health Inc.. It has a market capitalization of just US$115m, and insiders have US$11m worth of shares, in their own names. When analysing a company, looking at ownership may seem a logical place to start. But ultimately, many risks exist within the business itself, rather than its shareholders. For example, we’ve discovered 3 warning signs for Axcella Health (of which 1 is major) which any shareholder or potential investor should be aware of.
General Public Ownership
With a 14% ownership, the general public have some degree of sway over AXLA. 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 an ownership of 49%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Public Company Ownership
It appears to us that public companies own 8.7% of AXLA. It’s hard to say for sure, but this suggests they have entwined business interests. This might be a strategic stake, so it’s worth watching this space for changes in ownership.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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