With a 39% stake, Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) insiders have a lot riding on the company
Key Insights
Verrica Pharmaceuticals' significant insider ownership suggests inherent interests in company's expansion
The top 3 shareholders own 55% of the company
A look at the shareholders of Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
So it follows, every decision made by insiders of Verrica Pharmaceuticals regarding the company's future would be crucial to them.
In the chart below, we zoom in on the different ownership groups of Verrica Pharmaceuticals.
See our latest analysis for Verrica Pharmaceuticals
What Does The Institutional Ownership Tell Us About Verrica Pharmaceuticals?
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.
We can see that Verrica Pharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Verrica Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 6.3% of Verrica Pharmaceuticals. 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. Our data shows that Paul Manning is the largest shareholder with 36% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 6.3%, of the shares outstanding, respectively.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 Verrica 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 a reasonable proportion of Verrica Pharmaceuticals Inc.. Insiders own US$110m worth of shares in the US$280m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. 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.
Private Equity Ownership
With a stake of 12%, private equity firms could influence the Verrica Pharmaceuticals board. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Verrica Pharmaceuticals , and understanding them should be part of your investment process.
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.
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