Do Institutions Own HLS Therapeutics Inc. (TSE:HLS) Shares?

By
Simply Wall St
Published
January 26, 2020
TSX:HLS
Source: Shutterstock

The big shareholder groups in HLS Therapeutics Inc. (TSE:HLS) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

HLS Therapeutics is a smaller company with a market capitalization of CA$707m, 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 HLS Therapeutics.

Check out our latest analysis for HLS Therapeutics

TSX:HLS Ownership Summary, January 27th 2020
TSX:HLS Ownership Summary, January 27th 2020

What Does The Institutional Ownership Tell Us About HLS Therapeutics?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that HLS Therapeutics does have institutional investors; and they hold 5.2% of the stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 HLS Therapeutics's earnings history, below. Of course, the future is what really matters.

TSX:HLS Income Statement, January 27th 2020
TSX:HLS Income Statement, January 27th 2020

Our data indicates that hedge funds own 30% of HLS Therapeutics. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Stadium Capital Management, LLC is currently the largest shareholder, with 17% of shares outstanding. Next, we have Athyrium Capital Management, LP and HealthCor Management L.P. as the second and third largest shareholders, holding 14% and 13%, of the shares outstanding, respectively.

On studying the facts and figures more closely, we found that the top 4 shareholders control 53% of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 HLS Therapeutics

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.

Shareholders would probably be interested to learn that insiders own shares in HLS Therapeutics Inc.. As individuals, the insiders collectively own CA$60m worth of the CA$707m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public holds a 34% stake in HLS. 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 Equity Ownership

Private equity firms hold a 23% stake in HLS. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that HLS Therapeutics is showing 4 warning signs in our investment analysis , you should know about...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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