Despite selling recently, PYC Therapeutics Limited (ASX:PYC) insiders own 49% stake and recent decline might have cost them

By
Simply Wall St
Published
February 24, 2022
ASX:PYC
Source: Shutterstock

If you want to know who really controls PYC Therapeutics Limited (ASX:PYC), then you'll have to look at the makeup of its share registry. With 49% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Despite recent sales, insiders own the most shares in the company. As a result, the group bore the brunt of last week’s AU$48m market cap loss.

In the chart below, we zoom in on the different ownership groups of PYC Therapeutics.

View our latest analysis for PYC Therapeutics

ownership-breakdown
ASX:PYC Ownership Breakdown February 24th 2022

What Does The Lack Of Institutional Ownership Tell Us About PYC Therapeutics?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of PYC Therapeutics, for yourself, below.

earnings-and-revenue-growth
ASX:PYC Earnings and Revenue Growth February 24th 2022

We note that hedge funds don't have a meaningful investment in PYC Therapeutics. Looking at our data, we can see that the largest shareholder is Alan Tribe with 31% of shares outstanding. For context, the second largest shareholder holds about 6.4% of the shares outstanding, followed by an ownership of 5.3% by the third-largest shareholder.

On looking further, we found that 52% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of PYC Therapeutics

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

It seems insiders own a significant proportion of PYC Therapeutics Limited. Insiders own AU$155m worth of shares in the AU$318m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. 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 33% stake in PYC Therapeutics. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 17%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 4 warning signs for PYC Therapeutics (1 is potentially serious) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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