Cipher Pharmaceuticals Inc.'s (TSE:CPH) 23% gain last week benefited both individual investors who own 56% as well as insiders
Key Insights
Cipher Pharmaceuticals' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
44% of the business is held by the top 9 shareholders
To get a sense of who is truly in control of Cipher Pharmaceuticals Inc. (TSE:CPH), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While individual investors were the group that benefitted the most from last week’s CA$26m market cap gain, insiders too had a 43% share in those profits.
Let's take a closer look to see what the different types of shareholders can tell us about Cipher Pharmaceuticals.
See our latest analysis for Cipher Pharmaceuticals
What Does The Lack Of Institutional Ownership Tell Us About Cipher Pharmaceuticals?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Cipher Pharmaceuticals, for yourself, below.
We note that hedge funds don't have a meaningful investment in Cipher Pharmaceuticals. John Mull is currently the company's largest shareholder with 38% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.8% and 1.4%, of the shares outstanding, respectively. Two of the top three shareholders happen to be Chief Executive Officer and Lead Director, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.
Our studies suggest that the top 9 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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 Cipher 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 information suggests that insiders maintain a significant holding in Cipher Pharmaceuticals Inc.. Insiders own CA$60m worth of shares in the CA$137m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 56% of Cipher Pharmaceuticals shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Cipher Pharmaceuticals better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Cipher Pharmaceuticals you should be aware of.
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.
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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.
