Veru Inc.'s (NASDAQ:VERU) recent 20% pullback adds to one-year year losses, institutional owners may take drastic measures
Given the large stake in the stock by institutions, Veru's stock price might be vulnerable to their trading decisions
A total of 5 investors have a majority stake in the company with 50% ownership
To get a sense of who is truly in control of Veru Inc. (NASDAQ:VERU), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And institutional investors saw their holdings value drop by 20% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 73% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Veru which might hurt individual investors.
Let's delve deeper into each type of owner of Veru, beginning with the chart below.
See our latest analysis for Veru
What Does The Institutional Ownership Tell Us About Veru?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Veru. 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 Veru's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Veru. Candriam Luxembourg S.A. is currently the company's largest shareholder with 13% of shares outstanding. Harry Fisch is the second largest shareholder owning 9.9% of common stock, and Perceptive Advisors LLC holds about 9.7% of the company stock. Harry Fisch, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive. Furthermore, CEO Mitchell Steiner is the owner of 9.1% of the company's shares.
Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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. 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 Veru
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
Our most recent data indicates that insiders own a reasonable proportion of Veru Inc.. It has a market capitalization of just US$111m, and insiders have US$21m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 23% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
Private equity firms hold a 9.7% stake in Veru. This suggests they can be influential in key policy decisions. 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Veru is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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