Could Bioventix PLC’s (LON:BVXP) Investor Composition Influence The Stock Price?

Every investor in Bioventix PLC (LON:BVXP) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.

Bioventix is a smaller company with a market capitalization of UK£216m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Bioventix.

See our latest analysis for Bioventix

AIM:BVXP Ownership Summary July 2nd 2020
AIM:BVXP Ownership Summary July 2nd 2020

What Does The Institutional Ownership Tell Us About Bioventix?

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.

Bioventix already has institutions on the share registry. Indeed, they own 69% of the company. 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 Bioventix’s earnings history, below. Of course, the future is what really matters.

AIM:BVXP Income Statement July 2nd 2020
AIM:BVXP Income Statement July 2nd 2020

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Bioventix is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Castlefield Investment Partners LLP with 19% of shares outstanding. Liontrust Investment Partners LLP is the second largest shareholder with 10% of common stock, followed by Hargreave Hale Limited, Asset Management Arm, holding 9.7% of the stock.

On studying the facts and figures more closely, we found that the top 5 shareholders control 53% of the company which implies that this group has considerable sway over the company’s decision-making.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Bioventix

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.

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 Bioventix PLC. Insiders have a UK£24m stake in this UK£216m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public holds a 13% stake in BVXP. 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 6.5%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Bioventix better, we need to consider many other factors. Case in point: We’ve spotted 1 warning sign for Bioventix you should be aware of.

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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