Cipher Pharmaceuticals Inc. (TSE:CPH) surges 13%; individual investors who own 57% shares profited along with insiders

Key Insights

• Cipher Pharmaceuticals' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 43% of the business is held by the top 9 shareholders
• Insiders own 42% of Cipher Pharmaceuticals

To get a sense of who is truly in control of Cipher Pharmaceuticals Inc. (TSE:CPH), it is important to understand the ownership structure of the business. With 57% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 13% increase in the stock price last week, individual investors profited the most, but insiders who own 42% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about Cipher Pharmaceuticals.

View our latest analysis for Cipher Pharmaceuticals

What Does The Institutional Ownership Tell Us About Cipher Pharmaceuticals?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Since institutions own only a small portion of Cipher Pharmaceuticals, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

Hedge funds don't have many shares in Cipher Pharmaceuticals. John Mull is currently the company's largest shareholder with 37% of shares outstanding. Craig Mull is the second largest shareholder owning 3.2% of common stock, and Harold Wolkin holds about 1.4% of the company stock. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Lead Director, respectively, suggesting that these insiders have a personal stake in the company.

Our studies suggest that the top 9 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. 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 Cipher Pharmaceuticals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our information suggests that insiders maintain a significant holding in Cipher Pharmaceuticals Inc.. It has a market capitalization of just CA$300m, and insiders have CA$126m worth of shares in their own names. 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 substantial 57% stake in Cipher Pharmaceuticals, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Cipher Pharmaceuticals better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Cipher Pharmaceuticals you should be aware of, and 1 of them is a bit concerning.

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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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.