Pulse Biosciences, Inc. (NASDAQ:PLSE) insiders have had a fantastic week as stock increased 31%, and they haven't stopped buying
Key Insights
Pulse Biosciences' significant insider ownership suggests inherent interests in company's expansion
76% of the company is held by a single shareholder (Robert Duggan)
To get a sense of who is truly in control of Pulse Biosciences, Inc. (NASDAQ:PLSE), it is important to understand the ownership structure of the business. With 78% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Having purchased shares recently, insiders must be glad after market cap hit US$416m last week.
Let's delve deeper into each type of owner of Pulse Biosciences, beginning with the chart below.
Check out our latest analysis for Pulse Biosciences
What Does The Institutional Ownership Tell Us About Pulse Biosciences?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in Pulse Biosciences. 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 Pulse Biosciences, (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 Pulse Biosciences. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Pulse Biosciences' case, its Top Key Executive, Robert Duggan, is the largest shareholder, holding 76% of shares outstanding. In comparison, the second and third largest shareholders hold about 1.6% and 1.4% of the stock. Interestingly, the third-largest shareholder, Mahkam Zanganeh is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
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. 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 Pulse Biosciences
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.
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 that insiders own more than half the Pulse Biosciences, Inc. stock. This gives them a lot of power. So they have a US$324m stake in this US$416m business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 16% stake in Pulse Biosciences. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 5 warning signs for Pulse Biosciences you should be aware of, and 2 of them shouldn'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.
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