Faron Pharmaceuticals Oy's (LON:FARN) market cap dropped UK£74m last week; Retail investors bore the brunt

Key Insights

• The considerable ownership by retail investors in Faron Pharmaceuticals Oy indicates that they collectively have a greater say in management and business strategy
• The top 11 shareholders own 50% of the company
• Insider ownership in Faron Pharmaceuticals Oy is 33%

If you want to know who really controls Faron Pharmaceuticals Oy (LON:FARN), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 39% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 33% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of Faron Pharmaceuticals Oy.

Check out our latest analysis for Faron Pharmaceuticals Oy

What Does The Institutional Ownership Tell Us About Faron Pharmaceuticals Oy?

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 Faron Pharmaceuticals Oy. 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 Faron Pharmaceuticals Oy's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Faron Pharmaceuticals Oy. The company's largest shareholder is Timo Syrjälä, with ownership of 19%. With 5.3% and 5.0% of the shares outstanding respectively, Tom-Erik Lind and A&B (HK) Company Limited are the second and third largest shareholders. Furthermore, CEO Markku Jalkanen is the owner of 4.8% of the company's shares.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Faron Pharmaceuticals Oy

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.

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 Faron Pharmaceuticals Oy. Insiders own UK£39m worth of shares in the UK£116m 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, who are usually individual investors, hold a 49% stake in Faron Pharmaceuticals Oy. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 8.0%, of the Faron Pharmaceuticals Oy stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Case in point: We've spotted 5 warning signs for Faron Pharmaceuticals Oy you should be aware of, and 3 of them don't sit too well with us.

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.