Regencell Bioscience Holdings Limited (NASDAQ:RGC) CEO Yat-Gai Au's holdings dropped 16% in value as a result of the recent pullback
Key Insights
Insiders appear to have a vested interest in Regencell Bioscience Holdings' growth, as seen by their sizeable ownership
Yat-Gai Au owns 81% of the company
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
Every investor in Regencell Bioscience Holdings Limited (NASDAQ:RGC) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 81% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As market cap fell to US$115m last week, insiders would have faced the highest losses than any other shareholder groups of the company.
Let's delve deeper into each type of owner of Regencell Bioscience Holdings, beginning with the chart below.
Check out our latest analysis for Regencell Bioscience Holdings
What Does The Lack Of Institutional Ownership Tell Us About Regencell Bioscience Holdings?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Regencell Bioscience Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Hedge funds don't have many shares in Regencell Bioscience Holdings. With a 81% stake, CEO Yat-Gai Au is the largest shareholder. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. With 7.6% and 0.05% of the shares outstanding respectively, Digital Mobile Venture Ltd. and Geode Capital Management, LLC are the second and third largest shareholders.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Regencell Bioscience Holdings
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.
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 Regencell Bioscience Holdings Limited stock. This gives them a lot of power. Given it has a market cap of US$115m, that means they have US$93m worth of shares. 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-- including retail investors -- own 11% 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 an ownership of 7.6%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Regencell Bioscience Holdings (at least 2 which are potentially serious) , and understanding them should be part of your investment process.
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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.
