Key Insights

• Significantly high institutional ownership implies Aehr Test Systems' stock price is sensitive to their trading actions
• 51% of the business is held by the top 18 shareholders
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Aehr Test Systems (NASDAQ:AEHR) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 68% ownership. 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, institutional investors endured the highest losses last week after market cap fell by US$70m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 73% for shareholders. Often called "market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the downtrend continues, institutions may face pressures to sell Aehr Test Systems, which might have negative implications on individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Aehr Test Systems.

What Does The Institutional Ownership Tell Us About Aehr Test Systems?

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.

As you can see, institutional investors have a fair amount of stake in Aehr Test Systems. 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. 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 Aehr Test Systems' earnings history below. Of course, the future is what really matters.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Aehr Test Systems. The Vanguard Group, Inc. is currently the largest shareholder, with 7.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.0% and 4.2%, of the shares outstanding, respectively. In addition, we found that Gayn Erickson, the CEO has 1.1% of the shares allocated to their name.

A closer look at our ownership figures suggests that the top 18 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Aehr Test Systems

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

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.

We can see that insiders own shares in Aehr Test Systems. In their own names, insiders own US$17m worth of stock in the US$309m company. 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 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Aehr Test Systems. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Aehr Test Systems (of which 2 are concerning!) you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com