Institutional investors are Egetis Therapeutics AB (publ)'s (STO:EGTX) biggest bettors and were rewarded after last week's kr272m market cap gain

Key Insights

• Given the large stake in the stock by institutions, Egetis Therapeutics' stock price might be vulnerable to their trading decisions
• 53% of the business is held by the top 6 shareholders
• 18% of Egetis Therapeutics is held by insiders

If you want to know who really controls Egetis Therapeutics AB (publ) (STO:EGTX), 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 24% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Last week’s 21% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 38% and last week's gain would have been more than welcomed.

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

Check out our latest analysis for Egetis Therapeutics

What Does The Institutional Ownership Tell Us About Egetis Therapeutics?

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.

We can see that Egetis Therapeutics does have institutional investors; and they hold a good portion of the company's stock. 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 Egetis Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.

Egetis Therapeutics is not owned by hedge funds. Our data shows that Frazier Life Sciences Management, LP is the largest shareholder with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 10%, of the shares outstanding, respectively.

On further inspection, we found that more than half the company's shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of Egetis Therapeutics

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Egetis Therapeutics AB (publ). It has a market capitalization of just kr1.6b, and insiders have kr279m 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-- 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 13%, private equity firms could influence the Egetis Therapeutics 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.

Private Company Ownership

It seems that Private Companies own 21%, of the Egetis Therapeutics stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Be aware that Egetis Therapeutics is showing 3 warning signs in our investment analysis , you should know about...

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com