Stock Analysis

Recent uptick might appease Cabaletta Bio, Inc. (NASDAQ:CABA) institutional owners after losing 89% over the past year

NasdaqGS:CABA
Source: Shutterstock

Key Insights

  • Given the large stake in the stock by institutions, Cabaletta Bio's stock price might be vulnerable to their trading decisions
  • 50% of the business is held by the top 10 shareholders
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Every investor in Cabaletta Bio, Inc. (NASDAQ:CABA) should be aware of the most powerful shareholder groups. With 72% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's US$13m market cap gain would probably be appreciated by institutional investors, especially after a year of 89% losses.

Let's delve deeper into each type of owner of Cabaletta Bio, beginning with the chart below.

See our latest analysis for Cabaletta Bio

ownership-breakdown
NasdaqGS:CABA Ownership Breakdown February 8th 2025

What Does The Institutional Ownership Tell Us About Cabaletta Bio?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Cabaletta Bio already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Cabaletta Bio, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:CABA Earnings and Revenue Growth February 8th 2025

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 6.2% of Cabaletta Bio. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Our data shows that T. Rowe Price Group, Inc. is the largest shareholder with 8.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.0% and 6.2%, of the shares outstanding, respectively. In addition, we found that Steven Nichtberger, the CEO has 2.8% of the shares allocated to their name.

We did some more digging and found that 10 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Cabaletta Bio

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

We can report that insiders do own shares in Cabaletta Bio, Inc.. In their own names, insiders own US$3.9m worth of stock in the US$127m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Cabaletta Bio. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 5.6% stake in Cabaletta Bio. This suggests they can be influential in key policy decisions. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Cabaletta Bio better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Cabaletta Bio you should be aware of, and 3 of them shouldn't be ignored.

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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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

About NasdaqGS:CABA

Cabaletta Bio

A clinical-stage biotechnology company, focuses on the discovery and development of engineered T cell therapies for patients with B cell-mediated autoimmune diseases.

Flawless balance sheet and good value.

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