Institutions profited after Black Diamond Therapeutics, Inc.'s (NASDAQ:BDTX) market cap rose US$152m last week but private equity firms profited the most
Key Insights
Significant control over Black Diamond Therapeutics by private equity firms implies that the general public has more power to influence management and governance-related decisions
The top 5 shareholders own 54% of the company
A look at the shareholders of Black Diamond Therapeutics, Inc. (NASDAQ:BDTX) can tell us which group is most powerful. We can see that private equity firms own the lion's share in the company with 40% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Private equity firms gained the most after market cap touched US$226m last week, while institutions who own 37% also benefitted.
In the chart below, we zoom in on the different ownership groups of Black Diamond Therapeutics.
Check out our latest analysis for Black Diamond Therapeutics
What Does The Institutional Ownership Tell Us About Black Diamond 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.
Black Diamond Therapeutics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Black Diamond Therapeutics, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Black Diamond Therapeutics. The company's largest shareholder is Versant Venture Management, LLC, with ownership of 18%. Bellevue Asset Management AG is the second largest shareholder owning 15% of common stock, and New Enterprise Associates, Inc. holds about 9.4% of the company stock. In addition, we found that David M. Epstein, the CEO has 2.6% of the shares allocated to their name.
On looking further, we found that 54% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Black Diamond Therapeutics
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
We can see that insiders own shares in Black Diamond Therapeutics, Inc.. It has a market capitalization of just US$226m, and insiders have US$8.1m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
With a stake of 40%, private equity firms could influence the Black Diamond Therapeutics board. 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. Take risks for example - Black Diamond Therapeutics has 4 warning signs (and 3 which are a bit concerning) we think you should know about.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
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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