Could Invitae Corporation’s (NYSE:NVTA) Investor Composition Influence The Stock Price?

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

The big shareholder groups in Invitae Corporation (NYSE:NVTA) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Invitae isn’t enormous, but it’s not particularly small either. It has a market capitalization of US$2.2b, which means it would generally expect to see some institutions on the share registry. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about NVTA.

View our latest analysis for Invitae

NYSE:NVTA Ownership Summary, July 10th 2019
NYSE:NVTA Ownership Summary, July 10th 2019

What Does The Institutional Ownership Tell Us About Invitae?

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.

Invitae already has institutions on the share registry. Indeed, they own 79% of 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. 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 Invitae, (below). Of course, keep in mind that there are other factors to consider, too.

NYSE:NVTA Income Statement, July 10th 2019
NYSE:NVTA Income Statement, July 10th 2019

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don’t have many shares in Invitae. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Invitae

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.

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.

I can report that insiders do own shares in Invitae Corporation. The insiders have a meaningful stake worth US$98m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, with a 17% stake in the company, will not easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.