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Both private equity firms who control a good portion of Alignment Healthcare, Inc. (NASDAQ:ALHC) along with institutions must be dismayed after last week’s 6.9% decrease


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. We can see that private equity firms own the lion’s share in the company with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 42% came under pressure after market cap dropped to US$2.1b last week,private equity firms took the most losses.

In the chart below, we zoom in on the different ownership groups of Alignment Healthcare.

See our latest analysis for Alignment Healthcare

NasdaqGS:ALHC Ownership Breakdown December 28th 2022

What Does The Institutional Ownership Tell Us About Alignment Healthcare?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Alignment Healthcare does have institutional investors; and they hold a good portion of the company’s stock. 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.

earnings-and-revenue-growth
NasdaqGS:ALHC Earnings and Revenue Growth December 28th 2022

We note that hedge funds don’t have a meaningful investment in Alignment Healthcare. General Atlantic Service Company, L.P. is currently the company’s largest shareholder with 33% of shares outstanding. With 9.6% and 9.0% 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 1.5% 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

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 report that insiders do own shares in Alignment Healthcare, Inc.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$113m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

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

Private equity firms hold a 42% stake in Alignment Healthcare. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it 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. Be aware that Alignment Healthcare is showing 1 warning sign in our investment analysis , you should know about…

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.

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

Find out whether Alignment Healthcare 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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