Alvotech (NASDAQ:ALVO) Stock Price Falls 17% Last Week; private equity firms would not be satisfied

To get an idea of ​​who actually controls Alvotech (NASDAQ: ALVO), it’s important to understand the company’s ownership structure. The group holding the largest number of shares in the company, around 41% to be precise, are the private equity firms. In other words, the group faces the maximum upside potential (or downside risk).

As a result, private equity firms as a group suffered the highest losses last week after the market capitalization plummeted by $343 million.

Let’s dig deeper into each Alvotech owner type, starting with the table below.

However, if you prefer to see where opportunities and risks are within ALVO’s industryyou can consult our analysis on the American biotechnology industry.

NasdaqGM: ALVO Ownership Breakdown September 23, 2022

What does institutional ownership tell us about Alvotech?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

As you can see, institutional investors hold a sizeable share of Alvotech. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Alvotech’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGM: ALVO Earnings and Revenue Growth September 23, 2022

Alvotech is not owned by hedge funds. The main shareholder of the company is Aztiq Pharma Partners S.à RL, with a 41% stake. Celtic Holdings SCA is the second largest shareholder holding 30% of the common stock, and Brookfield Asset Management Inc. owns approximately 2.8% of the company’s stock.

After digging a little deeper, we found that the 2 major shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence company decisions.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Insider Ownership of Alvotech

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

Our information suggests that Alvotech insiders own less than 1% of the company. However, insiders may have an indirect interest through a more complex structure. This is a fairly large company, so it would be possible for board members to hold a significant stake in the company, without holding much proportional interest. In this case, they own about $7.3 million worth of stock (at current prices). It’s always good to see at least some insider ownership, but it might be worth checking to see if those insiders have sold.

General public property

The general public, including retail investors, owns 21% of the company’s capital and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Private equity ownership

With a 41% stake, private equity firms could influence Alvotech’s board. This might appeal to some, because private equity is sometimes an activist who holds management accountable. But other times, the private equity sells off, after taking the company public.

Private Company Ownership

We can see that private companies hold 30% of the issued shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next steps:

While it is worth considering the different groups that own a business, there are other, even more important factors. Example: we have identified 4 warning signs for Alvotech you should be aware, and 2 of them are a bit of a concern.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Valuation is complex, but we help make it simple.

Find out if Alvotech is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

Karen J. Nelson