If you want to know who really controls Axcella Health Inc. (NASDAQ:AXLA), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 44% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While private equity firms were the group that reaped the most benefits after last week’s 38% price gain, institutions also received a 21% cut.
In the chart below, we zoom in on the different ownership groups of Axcella Health.
NasdaqGM:AXLA Ownership Breakdown September 17th 2022
What Does The Institutional Ownership Tell Us About Axcella Health?
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 Axcella Health 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. 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 Axcella Health, (below). Of course, keep in mind that there are other factors to consider, too.
NasdaqGM:AXLA Earnings and Revenue Growth September 17th 2022
We note that hedge funds don't have a meaningful investment in Axcella Health. Flagship Pioneering is currently the company's largest shareholder with 36% of shares outstanding. FMR LLC is the second largest shareholder owning 15% of common stock, and Nestlé S.A. holds about 14% of the company stock.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Axcella Health
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.
Our most recent data indicates that insiders own less than 1% of Axcella Health Inc.. It appears that the board holds about US$999k worth of stock. This compares to a market capitalization of US$127m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 20% stake in Axcella Health. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 44%, private equity firms could influence the Axcella Health board. 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.
Public Company Ownership
It appears to us that public companies own 14% of Axcella Health. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Axcella Health better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 6 warning signs for Axcella Health (of which 3 don't sit too well with us!) you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport 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.
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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.
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