The ownership structure of DarioHealth Corp. (NASDAQ:DRIO) tell us something useful?

Every investor in DarioHealth Corp. (NASDAQ: DRIO) needs to know the most powerful shareholder groups. Insiders often own a large portion of younger, smaller companies, while larger companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

DarioHealth is a small company with a market capitalization of US$144 million, so it may still fly under the radar of many institutional investors. Our analysis of societal ownership below shows that institutions own shares in society. We can zoom in on the different ownership groups, to learn more about DarioHealth.

Check out our latest analysis for DarioHealth

NasdaqCM: DRIO Ownership Breakdown March 23, 2022

What does institutional ownership tell us about DarioHealth?

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.

DarioHealth already has institutions on the share register. Indeed, they hold a respectable stake in the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see DarioHealth’s revenue and historical earnings below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
NasdaqCM: DRIO Earnings and Revenue Growth March 23, 2022

Our data indicates that hedge funds own 13% of DarioHealth. This catches my attention because hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Clal Financial Management Ltd is currently the company’s largest shareholder with 11% of the outstanding shares. Meanwhile, the second and third largest shareholders hold 8.8% and 8.3% of the outstanding shares respectively. Additionally, the company’s CEO, Erez Raphael, directly owns 4.9% of the total shares outstanding.

We also observed that the top 7 shareholders represent more than half of the share register, with some small shareholders to balance the interests of the larger ones to some extent.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand a stock’s expected performance. There are plenty of analysts covering the stock, so it might be interesting to see what they are predicting as well.

Insider Ownership of DarioHealth

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. 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.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Shareholders would likely be interested to learn that insiders hold stock in DarioHealth Corp. It has a market capitalization of just US$144 million, and insiders have stock worth US$14 million, in their own name. Some would say this shows the alignment of interests between shareholders and the board, although we generally prefer to see larger insider participations. But it might be worth checking to see if these insiders have sold.

General public property

The general public, including retail investors, owns 13% of the company’s capital and therefore cannot be easily ignored. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Ownership of a public company

We can see that public companies own 6.1% of outstanding DarioHealth shares. We cannot be sure, but it is quite possible that it is a strategic issue. Businesses can be similar or work together.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand DarioHealth, we need to consider many other factors. To this end, you should be aware of the 3 warning signs we spotted with DarioHealth.

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 in which 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.