ASLAN Pharmaceuticals Limited's (NASDAQ:ASLN) recent 25% pullback adds to one-year year losses, hedge funds owners may take drastic measures
Key Insights
Given the large stake in the stock by institutions, ASLAN Pharmaceuticals' stock price might be vulnerable to their trading decisions
BVF Partners L.P. owns 63% of the company
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
Every investor in ASLAN Pharmaceuticals Limited (NASDAQ:ASLN) should be aware of the most powerful shareholder groups. With 70% stake, hedge funds possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And hedge funds investors saw their holdings value drop by 25% last week. The recent loss, which adds to a one-year loss of 29% for stockholders, may not sit well with this group of investors. Hedge funds are often aggressively managed, usually with the goal of focusing on short-term profits. Given their high ownership in ASLAN Pharmaceuticals, they wield significant power and continued under performance can lead to them influencing management decisions which might not be evaluating the company’s long-term prospects.
Let's take a closer look to see what the different types of shareholders can tell us about ASLAN Pharmaceuticals.
View our latest analysis for ASLAN Pharmaceuticals
What Does The Institutional Ownership Tell Us About ASLAN 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.
ASLAN Pharmaceuticals already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 ASLAN Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.
Our data indicates that hedge funds own 70% of ASLAN Pharmaceuticals. 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 BVF Partners L.P., with ownership of 63%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 3.5% by the third-largest shareholder. Furthermore, CEO Carl Alan Jason Firth is the owner of 0.9% of the company's shares.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of ASLAN Pharmaceuticals
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 ASLAN Pharmaceuticals Limited. In their own names, insiders own US$2.9m worth of stock in the US$229m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 13% 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand ASLAN Pharmaceuticals better, we need to consider many other factors. Take risks for example - ASLAN Pharmaceuticals has 5 warning signs (and 3 which are significant) we think you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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.
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.
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