Yahoo Finance Positive week for Mereo BioPharma Group plc (NASDAQ:MREO) hedge funds investors who lost 33% over the past year
A look at the shareholders of Mereo BioPharma Group plc (NASDAQ:MREO) can tell us which group is most powerful. We can see that hedge funds own the lion's share in the company with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
After a year of 33% losses, last week’s 25% gain would be welcomed by hedge funds investors as a likely sign that returns might start trending higher.
Let's delve deeper into each type of owner of Mereo BioPharma Group, beginning with the chart below.
See our latest analysis for Mereo BioPharma Group
What Does The Institutional Ownership Tell Us About Mereo BioPharma Group?
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 Mereo BioPharma Group. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Mereo BioPharma Group, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 37% of Mereo BioPharma Group shares. 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. Our data shows that Rubric Capital Management LP is the largest shareholder with 15% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.8% and 9.0% of the stock.
We did some more digging and found that 6 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Mereo BioPharma Group
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.
We note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO.
General Public Ownership
The general public, who are usually individual investors, hold a 24% stake in Mereo BioPharma Group. 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
With an ownership of 16%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.
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. Be aware that Mereo BioPharma Group is showing 4 warning signs in our investment analysis , and 2 of those are a bit concerning...
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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