Seres Therapeutics, Inc.'s (NASDAQ:MCRB) market cap dropped US$15m last week; individual investors who hold 50% were hit as were institutions

Key Insights

• Significant control over Seres Therapeutics by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 50% of the company
• 23% of Seres Therapeutics is held by Institutions

A look at the shareholders of Seres Therapeutics, Inc. (NASDAQ:MCRB) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 11% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 23% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Seres Therapeutics.

View our latest analysis for Seres Therapeutics

What Does The Institutional Ownership Tell Us About Seres Therapeutics?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Seres Therapeutics. 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 Seres Therapeutics, (below). Of course, keep in mind that there are other factors to consider, too.

Seres Therapeutics is not owned by hedge funds. Flagship Pioneering, Inc is currently the company's largest shareholder with 14% of shares outstanding. The second and third largest shareholders are FMR LLC and Nestlé S.A., with an equal amount of shares to their name at 13%.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Seres Therapeutics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 less than 1% of Seres Therapeutics, Inc.. It appears that the board holds about US$757k worth of stock. This compares to a market capitalization of US$128m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Seres Therapeutics. 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 14%, 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 13% of Seres Therapeutics. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 5 warning signs we've spotted with Seres Therapeutics (including 2 which 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.

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.