Significant control over MeiraGTx Holdings by private equity firms implies that the general public has more power to influence management and governance-related decisions
To get a sense of who is truly in control of MeiraGTx Holdings plc (NASDAQ:MGTX), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 28% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And individual investors on the other hand have a 26% ownership in the company.
Let's delve deeper into each type of owner of MeiraGTx Holdings, beginning with the chart below.
NasdaqGS:MGTX Ownership Breakdown February 26th 2024
What Does The Institutional Ownership Tell Us About MeiraGTx 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.
As you can see, institutional investors have a fair amount of stake in MeiraGTx Holdings. 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. 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 MeiraGTx Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqGS:MGTX Earnings and Revenue Growth February 26th 2024
It looks like hedge funds own 15% of MeiraGTx Holdings shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Perceptive Advisors LLC is currently the company's largest shareholder with 18% of shares outstanding. In comparison, the second and third largest shareholders hold about 10% and 8.3% of the stock. Additionally, the company's CEO Alexandria Forbes directly holds 2.2% of the total shares outstanding.
To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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 is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of MeiraGTx Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over MeiraGTx Holdings. 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
With an ownership of 28%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
Public Company Ownership
It appears to us that public companies own 7.4% of MeiraGTx Holdings. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with MeiraGTx Holdings , and understanding them should be part of your investment process.
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.
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
