COMPASS Pathways plc (NASDAQ:CMPS) surges 12%; individual investors who own 44% shares profited along with institutions

Key Insights

• COMPASS Pathways' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 25 shareholders
• Institutional ownership in COMPASS Pathways is 34%

We've discovered 4 warning signs about COMPASS Pathways. View them for free.

To get a sense of who is truly in control of COMPASS Pathways plc (NASDAQ:CMPS), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors gained the most after market cap touched US$290m last week, while institutions who own 34% also benefitted.

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

View our latest analysis for COMPASS Pathways

What Does The Institutional Ownership Tell Us About COMPASS Pathways?

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 COMPASS Pathways. 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. 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 COMPASS Pathways' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in COMPASS Pathways. The company's largest shareholder is Deep Track Capital, LP, with ownership of 10%. With 7.5% and 4.2% of the shares outstanding respectively, Atai Life Sciences N.V. and TCG Crossover Management, LLC are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 25 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 COMPASS Pathways

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our most recent data indicates that insiders own some shares in COMPASS Pathways plc. In their own names, insiders own US$13m worth of stock in the US$290m 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 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over COMPASS Pathways. 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

Private equity firms hold a 10% stake in COMPASS Pathways. 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.

Public Company Ownership

Public companies currently own 7.5% of COMPASS Pathways stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. For example, we've discovered 4 warning signs for COMPASS Pathways (2 are a bit unpleasant!) that you should be aware of before investing here.

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.