Key Insights

• Given the large stake in the stock by institutions, Alignment Healthcare's stock price might be vulnerable to their trading decisions
• The top 3 shareholders own 50% of the company
• Recent sales by insiders

To get a sense of who is truly in control of Alignment Healthcare, Inc. (NASDAQ:ALHC), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week's US$271m market cap gain would probably be appreciated by institutional investors, especially after a year of 3.8% losses.

Let's delve deeper into each type of owner of Alignment Healthcare, beginning with the chart below.

What Does The Institutional Ownership Tell Us About Alignment Healthcare?

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 Alignment Healthcare. 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 Alignment Healthcare's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Alignment Healthcare. The company's largest shareholder is General Atlantic Service Company, L.P., with ownership of 32%. With 9.4% and 8.9% of the shares outstanding respectively, Warburg Pincus LLC and FMR LLC are the second and third largest shareholders. In addition, we found that John Kao, the CEO has 1.7% of the shares allocated to their name.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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

Insider Ownership Of Alignment Healthcare

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 report that insiders do own shares in Alignment Healthcare, Inc.. This is a big company, so it is good to see this level of alignment. Insiders own US$64m worth of shares (at current prices). 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 Alignment Healthcare. 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

With a stake of 41%, private equity firms could influence the Alignment Healthcare board. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Alignment Healthcare , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.