In the wake of Cerus Corporation’s (NASDAQ:CERS) latest US$55m market cap drop, institutional owners may be forced to take severe actions

If you want to know who really controls Cerus Corporation (NYSE:CERUS), you need to look at the composition of its stock register. And the group holding the biggest piece of the pie are 70% owned institutions. In other words, the group will gain the most (or lose the most) from their investment in the company.

And institutional investors saw their holdings fall 9.5% last week. The recent loss, which adds to a 44% year-on-year loss for shareholders, may not sit well with this group of investors. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Therefore, if the downtrend continues, institutions could come under pressure to sell Cerus, which could have a negative impact on individual investors.

In the graphic below we zoom in on the different ownership groups of Cerus.

Check out our latest analysis for Cerus

What does institutional ownership tell us about Cerus?

Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are included in major indices.

As you can see, institutional investors have a significant stake in Cerus. This may indicate that the company has a certain level of credibility in the investor community. However, it’s best not to rely on the supposed confirmation that comes from institutional investors. They too are sometimes wrong. It’s not uncommon for the stock price to fall sharply when two large institutional investors attempt to sell a stock at the same time. So, it’s worth reviewing Cerus’ earnings history so far (below). Of course, keep in mind that there are other factors to consider as well.

Institutional investors own over 50% of the company, so collectively they can likely heavily influence board decisions. It looks like hedge funds own 9.1% of Cerus stock. This is interesting because hedge funds can be very active and active. Many are looking for medium-term catalysts that will boost stock prices. Looking at our data, we can see that the largest shareholder is Baker Bros. Advisors LP with 9.1% of the shares outstanding. ARK Investment Management LLC and BlackRock, Inc. are the second and third largest shareholders with 8.9% and 6.9% of the outstanding shares, respectively. In addition, we have noted that William Greenman, the CEO, is entitled to 1.0% of the shares.

After investigating further, we found that the top 11 collectively own 51% of the company, suggesting that no single shareholder has significant control over the company.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. There have been a few analyst reports on the stock, but it could become even better known over time.

Insider ownership of Cerus

The definition of corporate insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. The management of the company is accountable to the board of directors, which should represent the interests of the shareholders. It is noteworthy that sometimes high-ranking managers themselves sit on the board.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

Our latest data shows that insiders own some shares in Cerus Corporation. It has a market cap of just $522 million, and insiders have $17 million worth of shares in their own names. Some would say this shows the alignment of interests between shareholders and the board. But it might be worth checking to see if those insiders have sold.

General Public Property

With a 17% stake, the general public, made up mostly of individual investors, has some influence over Cerus. While this ownership may not be sufficient to sway a policy decision in their favor, they can still collectively influence company policy.

Next Steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Think of risks, for example. Every company has them and we discovered them 3 warning signs for Cerus you should know.

Ultimately the future is the most important thing. You can access it free Report on analysts’ forecasts for the company.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.