Key Insights

• Significant control over SOPHiA GENETICS by retail investors implies that the general public has more power to influence management and governance-related decisions

• 51% of the business is held by the top 10 shareholders

• Institutions own 27% of SOPHiA GENETICS

To get a sense of who is truly in control of SOPHiA GENETICS SA (NASDAQ:SOPH), it is important to understand the ownership structure of the business.  And the group that holds the biggest piece of the pie are retail investors with 44% ownership.  Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that reaped the most benefits after last week's 17% price gain, institutions also received a 27% cut.    

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

NasdaqGS:SOPH Ownership Breakdown June 4th 2024

What Does The Institutional Ownership Tell Us About SOPHiA GENETICS?

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 SOPHiA GENETICS.  This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does.  When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see SOPHiA GENETICS' historic earnings and revenue below, but keep in mind there's always more to the story.

NasdaqGS:SOPH Earnings and Revenue Growth June 4th 2024

We note that hedge funds don't have a meaningful investment in SOPHiA GENETICS.      Alychlo NV is currently the company's largest shareholder with 11% of shares outstanding.        For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 7.5% by the third-largest shareholder.      In addition, we found that Jurgi Camblong, the CEO has 3.8% of the shares allocated to their name.  

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.  

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance.   There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.  

Insider Ownership Of SOPHiA GENETICS

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders.  Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can see that insiders own shares in SOPHiA GENETICS SA.   In their own names, insiders own US$19m worth of stock in the US$326m 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 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over SOPHiA GENETICS.  While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 23%, private equity firms could influence the SOPHiA GENETICS board.   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:

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.    For instance, we've identified   1 warning sign for SOPHiA GENETICS  that you should be aware of.  

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.