Key Insights
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Significant control over Connect Biopharma Holdings by private equity firms implies that the general public has more power to influence management and governance-related decisions
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53% of the business is held by the top 4 shareholders
To get a sense of who is truly in control of Connect Biopharma Holdings Limited (NASDAQ:CNTB), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 39% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Individual insiders, on the other hand, account for 22% of the company’s stockholders. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of Connect Biopharma Holdings.
See our latest analysis for Connect Biopharma Holdings
What Does The Institutional Ownership Tell Us About Connect Biopharma Holdings?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that Connect Biopharma Holdings does have institutional investors; and they hold a good portion of the company’s stock. 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 Connect Biopharma Holdings’ earnings history below. Of course, the future is what really matters.
Hedge funds don’t have many shares in Connect Biopharma Holdings. Our data shows that Panacea Venture Management Co., Ltd. is the largest shareholder with 22% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 11% of the stock. Two of the top three shareholders happen to be President and Member of the Board of Directors, respectively. That is, insiders feature higher up in the heirarchy of the company’s top shareholders.
On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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 Connect Biopharma Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our most recent data indicates that insiders own a reasonable proportion of Connect Biopharma Holdings Limited. Insiders have a US$24m stake in this US$108m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 16% stake in Connect Biopharma Holdings. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 39%, private equity firms could influence the Connect Biopharma Holdings board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Private Company Ownership
We can see that Private Companies own 9.6%, of the shares on issue. 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:
It’s always worth thinking about the different groups who own shares in a company. But to understand Connect Biopharma Holdings better, we need to consider many other factors. For example, we’ve discovered 4 warning signs for Connect Biopharma Holdings (3 make us uncomfortable!) that you should be aware of before investing here.
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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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.