Institutions profited after Gossamer Bio, Inc.'s (NASDAQ:GOSS) market cap rose US$59m last week but individual investors profited the most
Key Insights
Significant control over Gossamer Bio by individual investors implies that the general public has more power to influence management and governance-related decisions
The top 25 shareholders own 44% of the company
To get a sense of who is truly in control of Gossamer Bio, Inc. (NASDAQ:GOSS), it is important to understand the ownership structure of the business. With 51% stake, individual investors 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.
Individual investors gained the most after market cap touched US$140m last week, while institutions who own 39% also benefitted.
Let's take a closer look to see what the different types of shareholders can tell us about Gossamer Bio.
View our latest analysis for Gossamer Bio
What Does The Institutional Ownership Tell Us About Gossamer Bio?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in Gossamer Bio. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Gossamer Bio, (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 Gossamer Bio. Our data shows that New Enterprise Associates, Inc. is the largest shareholder with 7.0% of shares outstanding. For context, the second largest shareholder holds about 2.8% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder. In addition, we found that Faheem Hasnain, the CEO has 2.3% of the shares allocated to their name.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Gossamer Bio
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 report that insiders do own shares in Gossamer Bio, Inc.. It has a market capitalization of just US$140m, and insiders have US$4.0m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 51% of Gossamer Bio shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Private Equity Ownership
With a stake of 7.0%, private equity firms could influence the Gossamer Bio 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:
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. Be aware that Gossamer Bio is showing 4 warning signs in our investment analysis , and 2 of those can't be ignored...
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.
