Stock Analysis

Hedge funds owners may take dramatic actions as Molecular Partners AG's (VTX:MOLN) recent 13% drop adds to one-year losses

SWX:MOLN
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Key Insights

If you want to know who really controls Molecular Partners AG (VTX:MOLN), 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 32% to be precise, is hedge funds. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, hedge funds investors endured the highest losses last week after market cap fell by CHF15m. The recent loss, which adds to a one-year loss of 53% for stockholders, may not sit well with this group of investors. Hedge funds are often aggressively managed, usually with the goal of focusing on short-term profits. Because of their large stake in Molecular Partners, they hold a lot of power, and persistent under performance could lead to them influencing management decisions that might diverge from the company's long-term goals.

In the chart below, we zoom in on the different ownership groups of Molecular Partners.

See our latest analysis for Molecular Partners

ownership-breakdown
SWX:MOLN Ownership Breakdown October 28th 2023

What Does The Institutional Ownership Tell Us About Molecular Partners?

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.

As you can see, institutional investors have a fair amount of stake in Molecular Partners. 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. 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 Molecular Partners' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SWX:MOLN Earnings and Revenue Growth October 28th 2023

It looks like hedge funds own 32% of Molecular Partners shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. BVF Partners L.P. is currently the largest shareholder, with 19% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 13% and 6.5%, of the shares outstanding, respectively. Furthermore, CEO Patrick Amstutz is the owner of 2.1% of the company's shares.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Molecular Partners

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.

It seems insiders own a significant proportion of Molecular Partners AG. Insiders own CHF19m worth of shares in the CHF100m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 31% stake in Molecular Partners. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 5.3% of the Molecular Partners shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Molecular Partners , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Valuation is complex, but we're helping make it simple.

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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.