Recent uptick might appease Novavax, Inc. (NASDAQ:NVAX) institutional owners after losing 35% over the past year

Key Insights

• Given the large stake in the stock by institutions, Novavax's stock price might be vulnerable to their trading decisions
• A total of 15 investors have a majority stake in the company with 50% ownership
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in Novavax, Inc. (NASDAQ:NVAX) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

After a year of 35% losses, last week’s 13% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher.

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

Check out our latest analysis for Novavax

What Does The Institutional Ownership Tell Us About Novavax?

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.

Novavax already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Novavax's historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 6.6% of Novavax. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that State Street Global Advisors, Inc. is the largest shareholder with 12% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 10% of common stock, and Shah Capital Management, Inc holds about 6.6% of the company stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Novavax

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.

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 Novavax, Inc. insiders own under 1% of the company. It appears that the board holds about US$2.0m worth of stock. This compares to a market capitalization of US$604m. 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 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Novavax. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 4.6% of the Novavax shares on issue. 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. Case in point: We've spotted 5 warning signs for Novavax you should be aware of, and 2 of them shouldn't be ignored.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.