Institutions along with individual investors who hold considerable shares inAehr Test Systems (NASDAQ:AEHR) come under pressure; lose 5.5% of holdings value

Stock Analysis

If you want to know who really controls Aehr Test Systems (NASDAQ:AEHR), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 36% came under pressure after market cap dropped to US$957m last week,individual investors took the most losses.

Let's delve deeper into each type of owner of Aehr Test Systems, beginning with the chart below.

View our latest analysis for Aehr Test Systems

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.

As you can see, institutional investors have a fair amount of stake in Aehr Test Systems. 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. 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 Aehr Test Systems' earnings history below. Of course, the future is what really matters.

It would appear that 5.9% of Aehr Test Systems shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. AWM Investment Company Inc is currently the company's largest shareholder with 5.9% of shares outstanding. With 4.9% and 4.1% of the shares outstanding respectively, FMR LLC and The Vanguard Group, Inc. are the second and third largest shareholders. Furthermore, CEO Gayn Erickson is the owner of 1.3% of the company's shares.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Aehr Test Systems. It has a market capitalization of just US$957m, and insiders have US$70m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

The general public, who are usually individual investors, hold a 50% stake in Aehr Test Systems. 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.

It's always worth thinking about the different groups who own shares in a company. But to understand Aehr Test Systems better, we need to consider many other factors. Take risks for example - Aehr Test Systems has 4 warning signs (and 1 which is significant) we think 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.

Find out whether Aehr Test Systems 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

Aehr Test Systems provides test systems for burning-in semiconductor devices in wafer level, singulated die, and package part form worldwide.

Flawless balance sheet with solid track record.