private equity firms who own 59% along with institutions invested in IO Biotech, Inc. (NASDAQ:IOBT) saw increase in their holdings value last week

Key Insights

• Significant control over IO Biotech by private equity firms implies that the general public has more power to influence management and governance-related decisions
• A total of 5 investors have a majority stake in the company with 53% ownership
• 21% of IO Biotech is held by Institutions

To get a sense of who is truly in control of IO Biotech, Inc. (NASDAQ:IOBT), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion’s share in the company with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While private equity firms were the group that reaped the most benefits after last week’s 13% price gain, institutions also received a 21% cut.

In the chart below, we zoom in on the different ownership groups of IO Biotech.

See our latest analysis for IO Biotech

What Does The Institutional Ownership Tell Us About IO Biotech?

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.

IO Biotech already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 IO Biotech, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don’t have many shares in IO Biotech. Lundbeckfonden BioCapital is currently the company’s largest shareholder with 21% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 9.4% of the stock.

Our research also brought to light the fact that roughly 53% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of IO Biotech

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 less than 1% of IO Biotech, Inc.. It seems the board members have no more than US$245k worth of shares in the US$104m company. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public– including retail investors — own 20% stake in the company, and hence can’t easily be ignored. 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.

Private Equity Ownership

Private equity firms hold a 59% stake in IO Biotech. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand IO Biotech better, we need to consider many other factors. Case in point: We’ve spotted 4 warning signs for IO Biotech you should be aware of, and 2 of them shouldn’t be ignored.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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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.