Significantly high institutional ownership implies Ovid Therapeutics' stock price is sensitive to their trading actions
52% of the business is held by the top 7 shareholders
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of Ovid Therapeutics Inc. (NASDAQ:OVID), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are hedge funds with 31% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Given the vast amount of money and research capacities at their disposal, hedge funds ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
Let's delve deeper into each type of owner of Ovid Therapeutics, beginning with the chart below.
NasdaqGS:OVID Ownership Breakdown January 18th 2024
What Does The Institutional Ownership Tell Us About Ovid Therapeutics?
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 Ovid Therapeutics. 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 Ovid Therapeutics' earnings history below. Of course, the future is what really matters.
NasdaqGS:OVID Earnings and Revenue Growth January 18th 2024
It would appear that 31% of Ovid Therapeutics shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is Takeda Pharmaceutical Company Limited with 11% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.7% and 8.7%, of the shares outstanding, respectively. In addition, we found that Jeremy Levin, the CEO has 5.1% of the shares allocated to their name.
We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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 Ovid Therapeutics
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.
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.
We can see that insiders own shares in Ovid Therapeutics Inc.. It has a market capitalization of just US$219m, and insiders have US$11m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ovid Therapeutics. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Public Company Ownership
Public companies currently own 11% of Ovid Therapeutics stock. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Ovid Therapeutics better, we need to consider many other factors. Take risks for example - Ovid Therapeutics has 2 warning signs (and 1 which makes us a bit uncomfortable) we think 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.
