Private equity firms who have a significant stake must be disappointed along with institutions after CVRx, Inc.'s (NASDAQ:CVRX) market cap dropped by US$29m

Key Insights

• CVRx's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 6 investors have a majority stake in the company with 52% ownership
• Insiders have been buying lately

To get a sense of who is truly in control of CVRx, Inc. (NASDAQ:CVRX), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 14% decrease in the stock price last week, private equity firms suffered the most losses, but institutions who own 42% stock also took a hit.

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

See our latest analysis for CVRx

What Does The Institutional Ownership Tell Us About CVRx?

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 CVRx. 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. 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 CVRx'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 CVRx. Johnson & Johnson Innovation - JJDC, Inc. is currently the largest shareholder, with 19% of shares outstanding. With 11% and 7.9% of the shares outstanding respectively, New Enterprise Associates, Inc. and Vensana Capital Management, LLC are the second and third largest shareholders.

We did some more digging and found that 6 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 CVRx

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 CVRx, Inc. in their own names. It has a market capitalization of just US$193m, and the board has only US$1.4m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in CVRx. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 44%, private equity firms could influence the CVRx board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

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 3 warning signs for CVRx you should be aware of, and 1 of them makes us a bit uncomfortable.

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.