Every investor in 4D pharma plc (LON:DDDD) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. 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 portfolio.
4D pharma is a smaller company with a market capitalization of UK£157m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholders can tell us about 4D pharma.
What Does The Institutional Ownership Tell Us About 4D pharma?
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 4D pharma. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of 4D pharma, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in 4D pharma. Steven Oliveira is currently the company’s largest shareholder with 9.6% of shares outstanding. The second and third largest shareholders are Duncan Peyton and Alexander Stevenson, with an equal amount of shares to their name at 6.4%. Two of the top three shareholders happen to be Chief Executive Officer and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company’s top shareholders.
A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of 4D pharma
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
It seems insiders own a significant proportion of 4D pharma plc. Insiders have a UK£42m stake in this UK£157m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
With a 25% ownership, the general public have some degree of sway over 4D pharma. 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.
Public Company Ownership
It appears to us that public companies own 6.6% of 4D pharma. We can’t be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that 4D pharma is showing 4 warning signs in our investment analysis , and 2 of those are concerning…
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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