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Could The Alphatec Holdings, Inc. (NASDAQ:ATEC) Ownership Structure Tell Us Something Useful?

Simply Wall St
·5 mins read

The big shareholder groups in Alphatec Holdings, Inc. (NASDAQ:ATEC) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

With a market capitalization of US$318m, Alphatec Holdings is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about Alphatec Holdings.

View our latest analysis for Alphatec Holdings

NasdaqGS:ATEC Ownership Breakdown July 3rd 2020
NasdaqGS:ATEC Ownership Breakdown July 3rd 2020

What Does The Institutional Ownership Tell Us About Alphatec Holdings?

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.

We can see that Alphatec Holdings 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. 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 Alphatec Holdings's earnings history, below. Of course, the future is what really matters.

NasdaqGS:ATEC Earnings and Revenue Growth July 3rd 2020
NasdaqGS:ATEC Earnings and Revenue Growth July 3rd 2020

Hedge funds don't have many shares in Alphatec Holdings. Our data shows that LS Power Development, LLC is the largest shareholder with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.1% and 3.9%, of the shares outstanding, respectively. Patrick Miles, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A closer look at our ownership figures suggests that the top 17 shareholders have a combined ownership of 51% implying that no one share holder has a majority.

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 Alphatec Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.

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.

Our most recent data indicates that insiders own a reasonable proportion of Alphatec Holdings, Inc.. Insiders have a US$44m stake in this US$318m business. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 27% ownership, the general public have some degree of sway over ATEC. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 12%, of the ATEC stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Alphatec Holdings you should be aware of, and 1 of them is concerning.

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.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.