Yahoo Finance Private equity firms who have a significant stake must be disappointed along with institutions after Rallybio Corporation's (NASDAQ:RLYB) market cap dropped by US$54m
If you want to know who really controls Rallybio Corporation (NASDAQ:RLYB), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private equity firms with 37% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While the holdings of private equity firms took a hit after last week’s 32% price drop, institutions with their 27% holdings also suffered.
Let's take a closer look to see what the different types of shareholders can tell us about Rallybio.
See our latest analysis for Rallybio
What Does The Institutional Ownership Tell Us About Rallybio?
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.
As you can see, institutional investors have a fair amount of stake in Rallybio. 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 Rallybio's earnings history below. Of course, the future is what really matters.
Our data indicates that hedge funds own 11% of Rallybio. 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. Viking Global Investors LP is currently the largest shareholder, with 11% of shares outstanding. With 10% and 8.2% of the shares outstanding respectively, 5AM Venture Management, LLC and TPG Capital, L.P. are the second and third largest shareholders. Furthermore, CEO Martin MacKay is the owner of 1.9% of the company's shares.
We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Rallybio
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own some shares in Rallybio Corporation. As individuals, the insiders collectively own US$13m worth of the US$203m company. This shows at least some alignment. 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 18% stake in Rallybio. 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 37% stake in Rallybio. 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.
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. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Rallybio (at least 3 which make us uncomfortable) , 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.
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.
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