Ovid Therapeutics Inc.'s (NASDAQ:OVID) hedge funds investors lost 12% last week but have benefitted from longer-term gains
Key Insights
Institutions' substantial holdings in Ovid Therapeutics implies that they have significant influence over the company's share price
The top 6 shareholders own 50% of the company
To get a sense of who is truly in control of Ovid Therapeutics Inc. (NASDAQ:OVID), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 28% to be precise, is hedge funds. Put another way, the group faces the maximum upside potential (or downside risk).
Hedge funds investors was the group most impacted after the company's market cap fell to US$231m last week. However, the 50% one-year return to shareholders may have helped lessen their pain. We would assume however, that they would be on the lookout for weakness in the future.
Let's delve deeper into each type of owner of Ovid Therapeutics, beginning with the chart below.
View our latest analysis for Ovid Therapeutics
What Does The Institutional Ownership Tell Us About Ovid Therapeutics?
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 Ovid Therapeutics. 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. 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 Ovid Therapeutics, (below). Of course, keep in mind that there are other factors to consider, too.
Our data indicates that hedge funds own 28% of Ovid Therapeutics. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. The company's largest shareholder is Takeda Pharmaceutical Company Limited, with ownership of 11%. Rubric Capital Management LP is the second largest shareholder owning 9.9% of common stock, and BVF Partners L.P. holds about 9.7% of the company stock. In addition, we found that Jeremy Levin, the CEO has 6.8% of the shares allocated to their name.
We did some more digging and found that 6 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
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 Ovid Therapeutics
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. 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.
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 Ovid Therapeutics Inc.. Insiders own US$24m worth of shares in the US$231m 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
With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ovid Therapeutics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Public Company Ownership
It appears to us that public companies own 11% of Ovid Therapeutics. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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. For instance, we've identified 2 warning signs for Ovid Therapeutics (1 is concerning) that you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
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