Alvotech’s (NASDAQ:ALVO) largest shareholders are private equity firms who were rewarded as market cap surged US$158m last week

Alvotech’s (NASDAQ:ALVO) largest shareholders are private equity firms who were rewarded as market cap surged US$158m last week

Key Insights

  • Significant control over Alvotech by vc/pe firms implies that this group likely has considerable sway over management and governance-related decisions
  • The top 2 shareholders own 72% of the company
  • Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

If you want to know who really controls Alvotech (NASDAQ:ALVO), then you’ll have to look at the makeup of its share registry. With 42% stake, private equity firms possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, private equity firms collectively scored the highest last week as the company hit US$3.1b market cap following a 5.4% gain in the stock.

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

See our latest analysis for Alvotech

ownership-breakdown
NasdaqGM:ALVO Ownership Breakdown January 16th 2023

What Does The Institutional Ownership Tell Us About Alvotech?

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.

Alvotech already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Alvotech’s historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growth
NasdaqGM:ALVO Earnings and Revenue Growth January 16th 2023

Hedge funds don’t have many shares in Alvotech. Aztiq Pharma Partners S.à R.L. is currently the largest shareholder, with 42% of shares outstanding. In comparison, the second and third largest shareholders hold about 31% and 2.9% of the stock.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Alvotech

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our data suggests that insiders own under 1% of Alvotech in their own names. But they may have an indirect interest through a corporate structure that we haven’t picked up on. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around US$14m worth of shares (at current prices). Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Alvotech. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

Private equity firms hold a 42% stake in Alvotech. 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.

Private Company Ownership

Our data indicates that Private Companies hold 31%, of the company’s shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Be aware that Alvotech is showing 4 warning signs in our investment analysis , you should know about…

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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 Alvotech 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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