Institutions own 37% of Aldeyra Therapeutics, Inc. (NASDAQ:ALDX) shares but retail investors control 37% of the company
Key Insights
Significant control over Aldeyra Therapeutics by retail investors implies that the general public has more power to influence management and governance-related decisions
The top 12 shareholders own 50% of the company
To get a sense of who is truly in control of Aldeyra Therapeutics, Inc. (NASDAQ:ALDX), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutions, on the other hand, account for 37% of the company's stockholders. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones.
Let's take a closer look to see what the different types of shareholders can tell us about Aldeyra Therapeutics.
See our latest analysis for Aldeyra Therapeutics
What Does The Institutional Ownership Tell Us About Aldeyra Therapeutics?
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.
As you can see, institutional investors have a fair amount of stake in Aldeyra Therapeutics. 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 Aldeyra Therapeutics, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Aldeyra Therapeutics. Perceptive Advisors LLC is currently the company's largest shareholder with 15% of shares outstanding. With 9.3% and 6.7% of the shares outstanding respectively, Knoll Capital Management and The Vanguard Group, Inc. are the second and third largest shareholders. Furthermore, CEO Todd Brady is the owner of 1.9% of the company's shares.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Aldeyra Therapeutics
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
We can report that insiders do own shares in Aldeyra Therapeutics, Inc.. It has a market capitalization of just US$202m, and insiders have US$4.8m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, who are usually individual investors, hold a 37% stake in Aldeyra Therapeutics. 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 Equity Ownership
Private equity firms hold a 24% stake in Aldeyra Therapeutics. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Aldeyra Therapeutics 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 Aldeyra Therapeutics (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
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.
