Following a 23% decline over last year, recent gains may please Accolade, Inc. (NASDAQ:ACCD) institutional owners

Accolade -0.65%

Accolade

ACCD

6.15

-0.65%

Key Insights

  • Given the large stake in the stock by institutions, Accolade's stock price might be vulnerable to their trading decisions
  • 51% of the business is held by the top 7 shareholders
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of Accolade, Inc. (NASDAQ:ACCD) can tell us which group is most powerful. The group holding the most number of shares in the company, around 77% 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).

Last week's US$57m market cap gain would probably be appreciated by institutional investors, especially after a year of 23% losses.

Let's take a closer look to see what the different types of shareholders can tell us about Accolade.

View our latest analysis for Accolade

ownership-breakdown
NasdaqGS:ACCD Ownership Breakdown March 29th 2024

What Does The Institutional Ownership Tell Us About Accolade?

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.

As you can see, institutional investors have a fair amount of stake in Accolade. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Accolade's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:ACCD Earnings and Revenue Growth March 29th 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Accolade. Our data shows that ARK Investment Management LLC is the largest shareholder with 8.8% of shares outstanding. For context, the second largest shareholder holds about 8.0% of the shares outstanding, followed by an ownership of 7.7% by the third-largest shareholder. Furthermore, CEO Rajeev Singh is the owner of 1.0% of the company's shares.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Accolade

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Shareholders would probably be interested to learn that insiders own shares in Accolade, Inc.. In their own names, insiders own US$17m worth of stock in the US$773m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 13% 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 7.0%, private equity firms could influence the Accolade 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Accolade , and understanding them should be part of your investment process.

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.

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