Institutions along with individual investors who hold considerable shares inBotanix Pharmaceuticals Limited (ASX:BOT) come under pressure; lose 13% of holdings value

Key Insights

• Significant control over Botanix Pharmaceuticals by individual investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 43% of the company
• Institutional ownership in Botanix Pharmaceuticals is 31%

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If you want to know who really controls Botanix Pharmaceuticals Limited (ASX:BOT), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 56% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 31% came under pressure after market cap dropped to AU$275m last week,individual investors took the most losses.

Let's delve deeper into each type of owner of Botanix Pharmaceuticals, beginning with the chart below.

See our latest analysis for Botanix Pharmaceuticals

What Does The Institutional Ownership Tell Us About Botanix Pharmaceuticals?

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.

Botanix Pharmaceuticals already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Botanix Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Botanix Pharmaceuticals. IOOF Investment Management Limited is currently the largest shareholder, with 11% of shares outstanding. With 5.7% and 5.2% of the shares outstanding respectively, MLC Investments Limited and Copia Investment Partners Ltd are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Botanix Pharmaceuticals

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.

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 can see that insiders own shares in Botanix Pharmaceuticals Limited. It has a market capitalization of just AU$275m, and insiders have AU$26m worth of shares, in their own names. This shows at least some alignment, but we usually like to see larger insider holdings. 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 substantial 56% stake in Botanix Pharmaceuticals, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

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. To that end, you should be aware of the 3 warning signs we've spotted with Botanix Pharmaceuticals .

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.

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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.