Hedge funds owners may consider drastic measures as DBV Technologies S.A.'s (EPA:DBV) recent €27m drop adds to long-term losses

Key Insights

• Significantly high institutional ownership implies DBV Technologies' stock price is sensitive to their trading actions
• 58% of the business is held by the top 3 shareholders
• Recent purchases by insiders

To get a sense of who is truly in control of DBV Technologies S.A. (EPA:DBV), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are hedge funds with 48% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And hedge funds investors endured the highest losses after the company's share price fell by 12% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 32% for shareholders. Generally speaking, hedge funds are quite aggressively managed, and are usually looking to maximize short-term returns. Because of their large stake in DBV Technologies, 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.

Let's delve deeper into each type of owner of DBV Technologies, beginning with the chart below.

View our latest analysis for DBV Technologies

What Does The Institutional Ownership Tell Us About DBV Technologies?

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.

DBV Technologies already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 DBV Technologies' historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 48% of DBV Technologies. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Baker Bros. Advisors LP is currently the largest shareholder, with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 9.7%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 58% stake.

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

Insider Ownership Of DBV Technologies

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.

Our data suggests that insiders own under 1% of DBV Technologies S.A. in their own names. It has a market capitalization of just €203m, and the board has only €185k worth of shares in their own names. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 17%, private equity firms could influence the DBV Technologies board. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand DBV Technologies better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for DBV Technologies you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.