Solid Biosciences Inc.'s (NASDAQ:SLDB) 14% loss last week hit both individual investors who own 51% as well as institutions
Key Insights
Significant control over Solid Biosciences by private equity firms implies that the general public has more power to influence management and governance-related decisions
A total of 3 investors have a majority stake in the company with 51% ownership
If you want to know who really controls Solid Biosciences Inc. (NASDAQ:SLDB), then you'll have to look at the makeup of its share registry. We can see that private equity firms own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While institutions who own 20% came under pressure after market cap dropped to US$108m last week,private equity firms took the most losses.
Let's take a closer look to see what the different types of shareholders can tell us about Solid Biosciences.
View our latest analysis for Solid Biosciences
What Does The Institutional Ownership Tell Us About Solid 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.
We can see that Solid Biosciences does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Solid Biosciences' earnings history below. Of course, the future is what really matters.
Our data indicates that hedge funds own 7.3% of Solid Biosciences. 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 Perceptive Advisors LLC, with ownership of 18%. In comparison, the second and third largest shareholders hold about 18% and 16% of the stock.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Solid Biosciences
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.
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 data suggests that insiders own under 1% of Solid Biosciences Inc. in their own names. It seems the board members have no more than US$1.0m worth of shares in the US$108m company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 18% stake in Solid Biosciences. 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 51%, private equity firms could influence the Solid Biosciences 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Solid Biosciences better, we need to consider many other factors. Take risks for example - Solid Biosciences has 3 warning signs (and 2 which make us uncomfortable) we think you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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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