Iovance Biotherapeutics, Inc.'s (NASDAQ:IOVA) recent 8.1% pullback adds to one-year year losses, institutional owners may take drastic measures

Simply Wall St · 11/13/2023 10:46

Key Insights

  • Significantly high institutional ownership implies Iovance Biotherapeutics' stock price is sensitive to their trading actions
  • A total of 11 investors have a majority stake in the company with 51% ownership
  • Insiders have been buying lately

A look at the shareholders of Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) can tell us which group is most powerful. The group holding the most number of shares in the company, around 75% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$1.0b last week after a 8.1% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 47% for shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. Hence, if weakness in Iovance Biotherapeutics' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

In the chart below, we zoom in on the different ownership groups of Iovance Biotherapeutics.

Check out our latest analysis for Iovance Biotherapeutics

ownership-breakdown
NasdaqGM:IOVA Ownership Breakdown November 13th 2023

What Does The Institutional Ownership Tell Us About Iovance Biotherapeutics?

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.

We can see that Iovance Biotherapeutics does have institutional investors; and they hold a good portion of the company's stock. 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 Iovance Biotherapeutics, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGM:IOVA Earnings and Revenue Growth November 13th 2023

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Iovance Biotherapeutics. Wayne Rothbaum is currently the company's largest shareholder with 9.0% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.0% and 6.6%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Iovance Biotherapeutics

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can see that insiders own shares in Iovance Biotherapeutics, Inc.. The insiders have a meaningful stake worth US$95m. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Iovance Biotherapeutics. 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 5.5% stake in Iovance Biotherapeutics. This suggests they can be influential in key policy decisions. 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:

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 example, we've discovered 4 warning signs for Iovance Biotherapeutics (2 shouldn't be ignored!) that you should be aware of before investing here.

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.