Private equity firms who have a significant stake must be disappointed along with institutions after Centessa Pharmaceuticals plc's (NASDAQ:CNTA) market cap dropped by US$139m
Private equity firms who have a significant stake must be disappointed along with institutions after Centessa Pharmaceuticals plc's (NASDAQ:CNTA) market cap dropped by US$139m
The considerable ownership by private equity firms in Centessa Pharmaceuticals indicates that they collectively have a greater say in management and business strategy
A total of 5 investors have a majority stake in the company with 55% ownership
If you want to know who really controls Centessa Pharmaceuticals plc (NASDAQ:CNTA), then you'll have to look at the makeup of its share registry. With 41% stake, private equity firms possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While institutions, who own 31% shares weren’t spared from last week’s US$139m market cap drop, private equity firms as a group suffered the maximum losses
In the chart below, we zoom in on the different ownership groups of Centessa Pharmaceuticals.
What Does The Institutional Ownership Tell Us About Centessa Pharmaceuticals?
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 Centessa Pharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Centessa Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGS:CNTA Earnings and Revenue Growth March 12th 2024
Our data indicates that hedge funds own 15% of Centessa Pharmaceuticals. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Looking at our data, we can see that the largest shareholder is Medicxi Ventures (UK) LLP with 20% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 9.9% by the third-largest shareholder.
Our research also brought to light the fact that roughly 55% 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 Centessa Pharmaceuticals
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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
Our most recent data indicates that insiders own some shares in Centessa Pharmaceuticals plc. In their own names, insiders own US$24m worth of stock in the US$952m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 11% stake in Centessa Pharmaceuticals. 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
Private equity firms hold a 41% stake in Centessa Pharmaceuticals. This suggests they can be influential in key policy decisions. 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.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Centessa Pharmaceuticals (of which 1 makes us a bit uncomfortable!) you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport 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.
