What You Need To Know About Arcutis Biotherapeutics, Inc.'s (NASDAQ:ARQT) Investor Composition

By
Simply Wall St
Published
May 16, 2022
NasdaqGS:ARQT
Source: Shutterstock

A look at the shareholders of Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. We also tend to see lower insider ownership in companies that were previously publicly owned.

Arcutis Biotherapeutics isn't enormous, but it's not particularly small either. It has a market capitalization of US$922m, which means it would generally expect to see some institutions on the share registry. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Arcutis Biotherapeutics.

See our latest analysis for Arcutis Biotherapeutics

ownership-breakdown
NasdaqGS:ARQT Ownership Breakdown May 16th 2022

What Does The Institutional Ownership Tell Us About Arcutis Biotherapeutics?

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.

We can see that Arcutis Biotherapeutics does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Arcutis Biotherapeutics, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:ARQT Earnings and Revenue Growth May 16th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It would appear that 5.2% of Arcutis Biotherapeutics shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that FMR LLC is the largest shareholder with 15% of shares outstanding. The second and third largest shareholders are BlackRock, Inc. and OrbiMed Advisors LLC, with an equal amount of shares to their name at 8.4%. Additionally, the company's CEO Todd Watanabe directly holds 1.5% of the total shares outstanding.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Arcutis Biotherapeutics

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Arcutis Biotherapeutics, Inc.. It has a market capitalization of just US$922m, and insiders have US$42m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With an ownership of 16%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

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 Arcutis Biotherapeutics is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

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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