Novavax, Inc.'s (NASDAQ:NVAX) Latest 7.4% Decline Adds to One-year Losses, Institutional Investors May Consider Drastic Measures

Simply Wall St ·  09/27 20:42

Key Insights

  • Institutions' substantial holdings in Novavax implies that they have significant influence over the company's share price

  • A total of 9 investors have a majority stake in the company with 51% ownership

  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Novavax, Inc. (NASDAQ:NVAX), it is important to understand the ownership structure of the business.  We can see that institutions own the lion's share in the company with 55% ownership.   In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutional investors saw their holdings value drop by 7.4% last week.  This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 65% for shareholders.   Often called "market movers", institutions wield significant power in influencing the price dynamics of any stock.  As a result, if the decline continues, institutional investors may be pressured to sell Novavax which might hurt individual investors.    

Let's delve deeper into each type of owner of Novavax, beginning with the chart below.

See our latest analysis for Novavax

NasdaqGS:NVAX Ownership Breakdown September 27th 2023

What Does The Institutional Ownership Tell Us About Novavax?

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.

Novavax already has institutions on the share registry. Indeed, they own a respectable stake in the company.  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.  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 Novavax, (below). Of course, keep in mind that there are other factors to consider, too.

NasdaqGS:NVAX Earnings and Revenue Growth September 27th 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions.    It looks like hedge funds own 5.8% of Novavax shares.  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.      State Street Global Advisors, Inc. is currently the company's largest shareholder with 12% of shares outstanding.        For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 7.4% by the third-largest shareholder.  

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.  

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 Novavax

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.  Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Novavax, Inc..   It appears that the board holds about US$2.6m worth of stock. This compares to a market capitalization of US$671m.  We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.  

General Public Ownership

The general public-- including retail investors -- own 31% stake in the company, and hence can't easily be ignored.   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.

Public Company Ownership

It appears to us that public companies own 6.9% of Novavax.   It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.  

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.    For instance, we've identified   4 warning signs for Novavax (2 can't be ignored)  that you should be aware of.  

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.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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