Institutional owners may take dramatic actions as Selecta Biosciences, Inc.'s (NASDAQ:SELB) recent 10% drop adds to one-year losses

By
Simply Wall St
Published
January 19, 2022
NasdaqGM:SELB
Source: Shutterstock

A look at the shareholders of Selecta Biosciences, Inc. (NASDAQ:SELB) can tell us which group is most powerful. With 50% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, institutional investors endured the highest losses last week after market cap fell by US$35m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 26% for shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Selecta Biosciences which might hurt individual investors.

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

View our latest analysis for Selecta Biosciences

ownership-breakdown
NasdaqGM:SELB Ownership Breakdown January 19th 2022

What Does The Institutional Ownership Tell Us About Selecta Biosciences?

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 have a fair amount of stake in Selecta Biosciences. 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 Selecta Biosciences, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGM:SELB Earnings and Revenue Growth January 19th 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Selecta Biosciences. Looking at our data, we can see that the largest shareholder is Timothy Springer with 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.0% and 4.6%, of the shares outstanding, respectively.

We did some more digging and found that 7 of the top shareholders account for roughly 52% 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Selecta Biosciences

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. 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.

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 insiders maintain a significant holding in Selecta Biosciences, Inc.. Insiders own US$81m worth of shares in the US$299m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Public Company Ownership

Public companies currently own 4.6% of Selecta Biosciences stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Selecta Biosciences better, we need to consider many other factors. For example, we've discovered 4 warning signs for Selecta Biosciences (1 is potentially serious!) that you should be aware of before investing here.

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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