Institutional investors are Sera Prognostics, Inc.'s (NASDAQ:SERA) biggest bettors and were rewarded after last week's US$35m market cap gain

Key Insights

• Given the large stake in the stock by institutions, Sera Prognostics' stock price might be vulnerable to their trading decisions
• 53% of the business is held by the top 7 shareholders
• Recent sales by insiders

A look at the shareholders of Sera Prognostics, Inc. (NASDAQ:SERA) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 31% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And as as result, institutional investors reaped the most rewards after the company's stock price gained 10% last week. One-year return to shareholders is currently 221% and last week’s gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of Sera Prognostics.

View our latest analysis for Sera Prognostics

What Does The Institutional Ownership Tell Us About Sera Prognostics?

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.

We can see that Sera Prognostics does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Sera Prognostics' earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 17% of Sera Prognostics shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Baker Bros. Advisors LP is the largest shareholder with 17% of shares outstanding. aMoon Fund is the second largest shareholder owning 9.2% of common stock, and Anthem Insurance Companies, Inc, Asset Management Arm holds about 6.8% of the company stock. In addition, we found that Evguenia Lindgardt, the CEO has 2.8% of the shares allocated to their name.

We did some more digging and found that 7 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. 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 Sera Prognostics

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 some shares in Sera Prognostics, Inc.. It has a market capitalization of just US$351m, and insiders have US$25m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. 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 24% stake in Sera Prognostics. 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.

Private Equity Ownership

Private equity firms hold a 20% stake in Sera Prognostics. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Sera Prognostics (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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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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.