Individual investors invested in Idorsia Ltd (VTX:IDIA) up 11% last week, insiders too were rewarded

Key Insights

• The considerable ownership by individual investors in Idorsia indicates that they collectively have a greater say in management and business strategy
• A total of 9 investors have a majority stake in the company with 51% ownership
• Insiders own 33% of Idorsia

A look at the shareholders of Idorsia Ltd (VTX:IDIA) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s CHF41m market cap gain, insiders too had a 33% share in those profits.

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

View our latest analysis for Idorsia

What Does The Institutional Ownership Tell Us About Idorsia?

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.

As you can see, institutional investors have a fair amount of stake in Idorsia. 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. 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 Idorsia's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Idorsia. The company's CEO Jean-Paul Clozel is the largest shareholder with 20% of shares outstanding. Martine Clozel is the second largest shareholder owning 7.2% of common stock, and UBS Asset Management AG holds about 6.2% of the company stock. Interestingly, the second-largest shareholder, Martine Clozel is also Chief Scientific Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Idorsia

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.

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 Idorsia Ltd. Insiders own CHF137m worth of shares in the CHF420m 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-- including retail investors -- own 41% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

Public companies currently own 5.4% of Idorsia stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Idorsia better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Idorsia you should be aware of, and 3 of them are significant.

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.

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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.