eHealth, Inc.'s (NASDAQ:EHTH) high institutional ownership speaks for itself as stock continues to impress, up 10% over last week
Key Insights
Significantly high institutional ownership implies eHealth's stock price is sensitive to their trading actions
50% of the business is held by the top 11 shareholders
To get a sense of who is truly in control of eHealth, Inc. (NASDAQ:EHTH), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 53% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And as as result, institutional investors reaped the most rewards after the company's stock price gained 10% last week. The one-year return on investment is currently 77% and last week's gain would have been more than welcomed.
Let's delve deeper into each type of owner of eHealth, beginning with the chart below.
See our latest analysis for eHealth
What Does The Institutional Ownership Tell Us About eHealth?
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 eHealth 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 eHealth, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It would appear that 17% of eHealth shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Palo Alto Investors LP is currently the company's largest shareholder with 9.7% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 9.1% of common stock, and 8 Knots Management, LLC holds about 7.8% of the company stock. Furthermore, CEO Francis Soistman is the owner of 1.1% of the company's shares.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 eHealth
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.
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.
We can report that insiders do own shares in eHealth, Inc.. It has a market capitalization of just US$249m, and insiders have US$7.8m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over eHealth. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that eHealth is showing 1 warning sign in our investment analysis , you should know about...
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
