Yahoo Finance Institutional investors are Liquidia Corporation's (NASDAQ:LQDA) biggest bettors and were rewarded after last week's US$60m market cap gain
Key Insights
Institutions' substantial holdings in Liquidia implies that they have significant influence over the company's share price
A total of 11 investors have a majority stake in the company with 51% ownership
To get a sense of who is truly in control of Liquidia Corporation (NASDAQ:LQDA), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 37% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Last week’s 14% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. One-year return to shareholders is currently 51% and last week’s gain was the icing on the cake.
In the chart below, we zoom in on the different ownership groups of Liquidia.
See our latest analysis for Liquidia
What Does The Institutional Ownership Tell Us About Liquidia?
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.
We can see that Liquidia does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Liquidia's earnings history below. Of course, the future is what really matters.
Our data indicates that hedge funds own 15% of Liquidia. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Looking at our data, we can see that the largest shareholder is Caligan Partners, LP with 15% of shares outstanding. Paul Manning is the second largest shareholder owning 8.5% of common stock, and BlackRock, Inc. holds about 5.0% of the company stock. Additionally, the company's CEO Roger Jeffs directly holds 2.8% of the total shares outstanding.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Liquidia
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own a reasonable proportion of Liquidia Corporation. Insiders have a US$60m stake in this US$492m business. 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
The general public, who are usually individual investors, hold a 36% stake in Liquidia. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Liquidia , and understanding them should be part of your investment process.
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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