In this analysis, my focus will be on developing a perspective on Zymeworks Inc’s (NYSE:ZYME) latest ownership structure, a less discussed, but important factor. The impact of a company’s ownership structure affects both its short- and long-term performance. The effect of an active institutional investor with a similar ownership as a passive pension-fund can be vastly different on a company’s corporate governance and accountability to shareholders. While this may be more interesting for long-term investors, short-term investors can also benefit by paying attention to when these institutions trade in order to take advantage of the heightened volatility. Now I will analyze ZYME’s shareholder registry in more detail.See our latest analysis for ZYME
Institutional OwnershipInstitutional investors typically buy and sell shares in large magnitudes which can significantly sway the share price, especially when there are relatively small amounts of shares available on the market to trade. With an institutional ownership of 9.20%, ZYME doesn’t seem too exposed to higher volatility resulting from institutional trading.
Insider OwnershipInsiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. ZYME insiders are also influential stakeholders with 5.69% ownership in the company. This level of ownership indicates closely aligned interests of shareholders and management. It may be interesting to see what insiders have been doing with their shares lately. Insiders buying shares can be a positive indicator of future performance, but a selling decision can be simply driven by personal financial needs.
General Public OwnershipA big stake of 38.38% in ZYME is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.
Private Equity OwnershipWith a stake of 25.04%, private equity firms form another important class of owners in ZYME. With a stake of 25.04%, they can influence ZYME’s key policy decisions. This is a positive sign for potential investors as these firms play an important role in aligning company policy with shareholder returns.
Public Company OwnershipAnother group of owners that a potential investor in ZYME should consider are other public companies, with a stake of 21.69%. While they invest more often due to strategic interests, an investment can also be driven by capital gains through share price appreciation. An ownership of this size indicates a strong financial backing and has the potential to influence ZYME’s business strategy. Thus, investors should dig deeper into ZYME’s business relations with these companies and how it can affect shareholder returns in the long-term.
What this means for you:
Are you a shareholder? Institutional ownership level and composition in ZYME is not high nor active enough to significantly impact its investment thesis. If you’re interested in bolstering your portfolio with new stocks and are looking for ideas, take a look at our free app to see my list of stocks with a strong growth potential.
Are you a potential investor? If you are building an investment case for ZYME, ownership structure alone should not dictate your decision to buy or sell the stock. Rather, you should be looking at fundamental drivers like the future growth expectations around ZYME, which is a key factor that will influence ZYME’s share value. Take a look at our most recent infographic report on ZYME for a more in-depth analysis of these factors to help you make a more well-informed investment decision.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.