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A look at the shareholders of Editas Medicine, Inc. (NASDAQ:EDIT) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.
With a market capitalization of US$2.0b, Editas Medicine is a decent size, so it is probably on the radar of institutional investors. In the chart below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Editas Medicine.
Check out our latest analysis for Editas Medicine
What Does The Institutional Ownership Tell Us About Editas Medicine?
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.
Editas Medicine 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 Editas Medicine's historic earnings and revenue, below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Editas Medicine. Our data shows that ARK Investment Management LLC is the largest shareholder with 8.7% of shares outstanding. Nikko Asset Management Co., Ltd. is the second largest shareholder owning 8.3% of common stock, and The Vanguard Group, Inc. holds about 7.7% of the company stock.
After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no one share holder has significant control over the company.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.