Key Insights

• Significantly high institutional ownership implies Adaptimmune Therapeutics' stock price is sensitive to their trading actions
• The top 4 shareholders own 56% of the company
• Recent sales by insiders

To get a sense of who is truly in control of Adaptimmune Therapeutics plc (NASDAQ:ADAP), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 37% to be precise, is hedge funds. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, hedge funds investors endured the highest losses last week after market cap fell by US$51m. The recent loss, which adds to a one-year loss of 17% for stockholders, may not sit well with this group of investors. Hedge funds typically use aggressive strategies that focus on short-term gains. Given their high ownership in Adaptimmune Therapeutics, they wield significant power and continued under performance can lead to them influencing management decisions which might not be evaluating the company's long-term prospects.

In the chart below, we zoom in on the different ownership groups of Adaptimmune Therapeutics.

What Does The Institutional Ownership Tell Us About Adaptimmune 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.

Adaptimmune Therapeutics 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 Adaptimmune Therapeutics' earnings history below. Of course, the future is what really matters.

It looks like hedge funds own 37% of Adaptimmune Therapeutics shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. EcoR1 Capital, LLC is currently the company's largest shareholder with 21% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 13%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Adaptimmune Therapeutics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that Adaptimmune Therapeutics plc insiders own under 1% of the company. It seems the board members have no more than US$2.0m worth of shares in the US$296m 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

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Adaptimmune 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

With a stake of 13%, private equity firms could influence the Adaptimmune Therapeutics board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Adaptimmune Therapeutics better, we need to consider many other factors. Be aware that Adaptimmune Therapeutics is showing 6 warning signs in our investment analysis , and 3 of those are a bit concerning...

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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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.