Institutions profited after Cassava Sciences, Inc.'s (NASDAQ:SAVA) market cap rose US$72m last week but individual investors profited the most

Key Insights

• Significant control over Cassava Sciences by individual investors implies that the general public has more power to influence management and governance-related decisions
• 36% of the business is held by the top 25 shareholders
• Insider ownership in Cassava Sciences is 12%

To get a sense of who is truly in control of Cassava Sciences, Inc. (NASDAQ:SAVA), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 60% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 5.5% increase in the stock price last week, individual investors profited the most, but institutions who own 28% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Cassava Sciences.

See our latest analysis for Cassava Sciences

What Does The Institutional Ownership Tell Us About Cassava Sciences?

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 Cassava Sciences. 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 Cassava Sciences, (below). Of course, keep in mind that there are other factors to consider, too.

Cassava Sciences is not owned by hedge funds. BlackRock, Inc. is currently the company's largest shareholder with 6.7% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.6% and 5.4% of the stock. Additionally, the company's CEO Richard Barry directly holds 1.0% of the total shares outstanding.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Cassava Sciences

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Cassava Sciences, Inc.. Insiders own US$162m worth of shares in the US$1.4b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 60% stake in Cassava Sciences, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Cassava Sciences better, we need to consider many other factors. For example, we've discovered 5 warning signs for Cassava Sciences (3 are a bit unpleasant!) that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.