Given the large stake in the stock by institutions, Adicet Bio's stock price might be vulnerable to their trading decisions
52% of the business is held by the top 6 shareholders
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
A look at the shareholders of Adicet Bio, Inc. (NASDAQ:ACET) can tell us which group is most powerful. The group holding the most number of shares in the company, around 53% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutional investors would appreciate the 28% increase in share price last week, given their one-year losses have totalled a disappointing 71%.
Let's delve deeper into each type of owner of Adicet Bio, beginning with the chart below.
NasdaqGM:ACET Ownership Breakdown January 7th 2024
What Does The Institutional Ownership Tell Us About Adicet Bio?
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.
Adicet Bio already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Adicet Bio's earnings history below. Of course, the future is what really matters.
NasdaqGM:ACET Earnings and Revenue Growth January 7th 2024
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It would appear that 9.8% of Adicet Bio shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. OrbiMed Advisors LLC is currently the largest shareholder, with 19% of shares outstanding. With 9.8% and 6.3% of the shares outstanding respectively, RTW Investments, LP and Cowen Inc,Private Banking and Investment Banking Investments are the second and third largest shareholders.
We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Adicet Bio
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
We can see that insiders own shares in Adicet Bio, Inc.. In their own names, insiders own US$2.9m worth of stock in the US$104m 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 15% stake in Adicet Bio. 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.
Private Equity Ownership
Private equity firms hold a 19% stake in Adicet Bio. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Adicet Bio better, we need to consider many other factors. Take risks for example - Adicet Bio has 3 warning signs (and 1 which is concerning) we think you should know about.
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.
