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Could Algernon Pharmaceuticals Inc.'s (CNSX:AGN) Investor Composition Influence The Stock Price?

Simply Wall St

The big shareholder groups in Algernon Pharmaceuticals Inc. (CNSX:AGN) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.'

Algernon Pharmaceuticals is a smaller company with a market capitalization of CA$5.4m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about AGN.

View our latest analysis for Algernon Pharmaceuticals

CNSX:AGN Ownership Summary, September 17th 2019

What Does The Lack Of Institutional Ownership Tell Us About Algernon Pharmaceuticals?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Algernon Pharmaceuticals might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

CNSX:AGN Income Statement, September 17th 2019

We note that hedge funds don't have a meaningful investment in Algernon Pharmaceuticals. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Algernon 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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of Algernon Pharmaceuticals Inc.. Insiders own CA$763k worth of shares in the CA$5.4m 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, who are mostly retail investors, collectively hold 72% of Algernon Pharmaceuticals shares. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Equity Ownership

Private equity firms hold a 12% stake in AGN. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.