Key Insights

• Institutions' substantial holdings in GRAIL implies that they have significant influence over the company's share price
• The top 8 shareholders own 51% of the company
• Recent sales by insiders

A look at the shareholders of GRAIL, Inc. (NASDAQ:GRAL) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, institutional investors benefitted the most after the company's market cap rose by US$57m last week.

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

What Does The Institutional Ownership Tell Us About GRAIL?

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 GRAIL. 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. 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 GRAIL, (below). Of course, keep in mind that there are other factors to consider, too.

Our data indicates that hedge funds own 8.9% of GRAIL. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Illumina, Inc. is currently the company's largest shareholder with 13% of shares outstanding. CRCM L.P. is the second largest shareholder owning 11% of common stock, and Sessa Capital IM, L.P. holds about 8.9% of the company stock.

We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of GRAIL

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.

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.

Our information suggests that GRAIL, Inc. insiders own under 1% of the company. It has a market capitalization of just US$555m, and the board has only US$3.9m worth of shares in their own names. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 19% stake in the company, and hence can't easily be ignored. 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 11% stake in GRAIL. This suggests they can be influential in key policy decisions. 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.

Public Company Ownership

It appears to us that public companies own 13% of GRAIL. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - GRAIL has 2 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.