Nasdaq
华尔街日报In the wake of Sera Prognostics, Inc.'s (NASDAQ:SERA) latest US$16m market cap drop, institutional owners may be forced to take severe actions
Key Insights
- Given the large stake in the stock by institutions, Sera Prognostics' stock price might be vulnerable to their trading decisions
- A total of 7 investors have a majority stake in the company with 53% ownership
- Insiders have sold recently
Every investor in Sera Prognostics, Inc. (NASDAQ:SERA) should be aware of the most powerful shareholder groups. With 40% 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.
And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$112m last week after a 13% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 54% for shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Sera Prognostics which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Sera Prognostics.
Check out our latest analysis for Sera Prognostics
What Does The Institutional Ownership Tell Us About Sera Prognostics?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Sera Prognostics already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Sera Prognostics' historic earnings and revenue below, but keep in mind there's always more to the story.
Our data indicates that hedge funds own 26% of Sera Prognostics. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Baker Bros. Advisors LP is currently the largest shareholder, with 17% of shares outstanding. With 9.4% and 6.2% of the shares outstanding respectively, Whetstone Capital Advisors, LLC and Chione Ltd are the second and third largest shareholders. In addition, we found that Zhenya Lindgardt, the CEO has 0.7% 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.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Sera Prognostics
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.
We can see that insiders own shares in Sera Prognostics, Inc.. As individuals, the insiders collectively own US$5.0m worth of the US$112m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 29% stake in Sera Prognostics. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Sera Prognostics better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Sera Prognostics (at least 1 which is concerning) , and understanding them should be part of your investment process.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.