HH&L Acquisition Co. (NYSE:HHLA) is favoured by institutional owners who hold 64% of the company
Key Insights
Significantly high institutional ownership implies HH&L Acquisition's stock price is sensitive to their trading actions
The top 10 shareholders own 52% of the company
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of HH&L Acquisition Co. (NYSE:HHLA), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 64% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
In the chart below, we zoom in on the different ownership groups of HH&L Acquisition.
Check out our latest analysis for HH&L Acquisition
What Does The Institutional Ownership Tell Us About HH&L Acquisition?
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.
HH&L Acquisition already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 HH&L Acquisition's earnings history below. Of course, the future is what really matters.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 6.5% of HH&L Acquisition. 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. Hh&L Investment Co is currently the largest shareholder, with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.5% and 3.9%, of the shares outstanding, respectively.
We did some more digging and found that 10 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of HH&L Acquisition
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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 HH&L Acquisition Co.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It seems the board members have no more than US$360k worth of shares in the US$211m company. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 10.0% stake, and are a relatively minor group of shareholders in HH&L Acquisition. We'd generally expect to see a higher level of ownership by the general public, than this. It's not too concerning, but it is worth noting that retail investors might struggle to influence board decisions.
Private Company Ownership
Our data indicates that Private Companies hold 20%, of the company's shares. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand HH&L Acquisition better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with HH&L Acquisition , and understanding them should be part of your investment process.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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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