Yahoo Finance private equity firms who own 39% along with institutions invested in Decibel Therapeutics, Inc. (NASDAQ:DBTX) saw increase in their holdings value last week
Key Insights
Decibel Therapeutics' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
56% of the business is held by the top 5 shareholders
To get a sense of who is truly in control of Decibel Therapeutics, Inc. (NASDAQ:DBTX), it is important to understand the ownership structure of the business. With 39% stake, private equity firms possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While private equity firms were the group that reaped the most benefits after last week’s 12% price gain, institutions also received a 30% cut.
Let's delve deeper into each type of owner of Decibel Therapeutics, beginning with the chart below.
Check out our latest analysis for Decibel Therapeutics
What Does The Institutional Ownership Tell Us About Decibel Therapeutics?
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.
Decibel Therapeutics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Decibel Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.
It would appear that 7.2% of Decibel Therapeutics shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company's largest shareholder is OrbiMed Advisors LLC, with ownership of 20%. With 13% and 8.5% of the shares outstanding respectively, Third Rock Ventures, LLC and Regeneron Pharmaceuticals, Inc. are the second and third largest shareholders.
Our research also brought to light the fact that roughly 56% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Decibel Therapeutics
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 less than 1% of Decibel Therapeutics, Inc.. It appears that the board holds about US$247k worth of stock. This compares to a market capitalization of US$111m. Many investors in smaller companies prefer to see the board more heavily invested. 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 15% stake in Decibel Therapeutics. 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
Private equity firms hold a 39% stake in Decibel Therapeutics. This suggests they can be influential in key policy decisions. 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.
Public Company Ownership
We can see that public companies hold 8.5% of the Decibel Therapeutics shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Decibel Therapeutics has 4 warning signs (and 2 which are a bit concerning) we think you should know about.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
