35.94 F
London
March 3, 2024
PI Global Investments
Private Equity

Sera Prognostics, Inc.’s (NASDAQ:SERA) market cap touched US$206m last week, benefiting both private equity firms who own 31% as well as institutions


Key Insights

  • Significant control over Sera Prognostics by private equity firms implies that the general public has more power to influence management and governance-related decisions
  • A total of 5 investors have a majority stake in the company with 54% ownership
  • Recent sales by insiders

A look at the shareholders of Sera Prognostics, Inc. (NASDAQ:SERA) can tell us which group is most powerful. We can see that private equity firms own the lion’s share in the company with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While private equity firms were the group that reaped the most benefits after last week’s 24% price gain, institutions also received a 23% cut.

Let’s delve deeper into each type of owner of Sera Prognostics, beginning with the chart below.

Check out our latest analysis for Sera Prognostics

NasdaqGM:SERA Ownership Breakdown January 14th 2024

What Does The Institutional Ownership Tell Us About Sera Prognostics?

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 Sera Prognostics. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Sera Prognostics’ historic earnings and revenue below, but keep in mind there’s always more to the story.

NasdaqGM:SERA Earnings and Revenue Growth January 14th 2024

Our data indicates that hedge funds own 22% of Sera Prognostics. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is Baker Bros. Advisors LP with 22% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.5% and 7.8%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 54% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Sera Prognostics

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. 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.

We can see that insiders own shares in Sera Prognostics, Inc.. It has a market capitalization of just US$206m, and insiders have US$6.5m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sera Prognostics. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 31% stake in Sera Prognostics. This suggests they can be influential in key policy decisions. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Sera Prognostics (of which 2 don’t sit too well with us!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Sera Prognostics is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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