private equity firms who own 35% along with institutions invested in Trevi Therapeutics, Inc. (NASDAQ:TRVI) saw increase in their holdings value last week
Key Insights
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Trevi Therapeutics' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
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The top 5 shareholders own 51% of the company
To get a sense of who is truly in control of Trevi Therapeutics, Inc. (NASDAQ:TRVI), 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 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 11% increase in the stock price last week, private equity firms profited the most, but institutions who own 34% stock also stood to gain from the increase.
In the chart below, we zoom in on the different ownership groups of Trevi Therapeutics.
Check out our latest analysis for Trevi Therapeutics
What Does The Institutional Ownership Tell Us About Trevi Therapeutics?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Trevi Therapeutics. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Trevi Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.
It would appear that 16% of Trevi Therapeutics shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is New Enterprise Associates, Inc., with ownership of 18%. Meanwhile, the second and third largest shareholders, hold 12% and 8.9%, of the shares outstanding, respectively.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.