Yahoo Finance After losing 12% in the past year, Adverum Biotechnologies, Inc. (NASDAQ:ADVM) institutional owners must be relieved by the recent gain
Key Insights
Given the large stake in the stock by institutions, Adverum Biotechnologies' stock price might be vulnerable to their trading decisions
50% of the business is held by the top 13 shareholders
A look at the shareholders of Adverum Biotechnologies, Inc. (NASDAQ:ADVM) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 45% ownership. 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 21% increase in share prices last week, given their one-year returns have been disappointing at 12%.
Let's take a closer look to see what the different types of shareholders can tell us about Adverum Biotechnologies.
See our latest analysis for Adverum Biotechnologies
What Does The Institutional Ownership Tell Us About Adverum Biotechnologies?
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 Adverum Biotechnologies does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Adverum Biotechnologies' earnings history below. Of course, the future is what really matters.
It looks like hedge funds own 7.0% of Adverum Biotechnologies shares. 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. The company's largest shareholder is FMR LLC, with ownership of 7.7%. The second and third largest shareholders are Morgan Stanley, Investment Banking and Brokerage Investments and BML Capital Management, LLC, with an equal amount of shares to their name at 7.1%. Furthermore, CEO Laurent Fischer is the owner of 0.8% of the company's shares.
After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Adverum Biotechnologies
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can see that insiders own shares in Adverum Biotechnologies, Inc.. In their own names, insiders own US$2.0m worth of stock in the US$101m 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-- including retail investors -- own 39% stake in the company, and hence can't 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.
Private Equity Ownership
With a stake of 5.0%, private equity firms could influence the Adverum Biotechnologies board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Adverum Biotechnologies better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Adverum Biotechnologies (at least 1 which is potentially serious) , and understanding them should be part of your investment process.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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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