Painful week for retail investors invested in Delcath Systems, Inc. (NASDAQ:DCTH) after 14% drop, institutions also suffered losses

Key Insights

• Significant control over Delcath Systems by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 43% of the company
• 43% of Delcath Systems is held by Institutions

To get a sense of who is truly in control of Delcath Systems, Inc. (NASDAQ:DCTH), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 49% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 43% came under pressure after market cap dropped to US$476m last week,retail investors took the most losses.

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

See our latest analysis for Delcath Systems

What Does The Institutional Ownership Tell Us About Delcath Systems?

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.

As you can see, institutional investors have a fair amount of stake in Delcath Systems. 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 Delcath Systems' historic earnings and revenue below, but keep in mind there's always more to the story.

Delcath Systems is not owned by hedge funds. The company's largest shareholder is Rosalind Advisors, Inc., with ownership of 8.3%. With 5.3% and 4.8% of the shares outstanding respectively, Vivo Capital, LLC and AIGH Investment Partners, L.L.C. are the second and third largest shareholders. In addition, we found that Gerard Michel, the CEO has 1.0% of the shares allocated to their name.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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

Insider Ownership Of Delcath Systems

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.

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.

We can report that insiders do own shares in Delcath Systems, Inc.. In their own names, insiders own US$9.8m worth of stock in the US$476m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Delcath Systems. 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

Private equity firms hold a 5.3% stake in Delcath Systems. This suggests they can be influential in key policy decisions. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Delcath Systems (1 is a bit unpleasant!) that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.