Painful week for private equity firms invested in Centessa Pharmaceuticals plc (NASDAQ:CNTA) after 8.0% drop, institutions also suffered losses

Key Insights

• Centessa Pharmaceuticals' significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 4 shareholders
• Institutions own 26% of Centessa Pharmaceuticals

Every investor in Centessa Pharmaceuticals plc (NASDAQ:CNTA) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 41% 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 26% came under pressure after market cap dropped to US$590m last week,private equity firms took the most losses.

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

See our latest analysis for Centessa Pharmaceuticals

What Does The Institutional Ownership Tell Us About Centessa Pharmaceuticals?

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 Centessa Pharmaceuticals. 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. 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 Centessa Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 15% of Centessa Pharmaceuticals. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Medicxi Ventures (UK) LLP is currently the largest shareholder, with 20% of shares outstanding. Index Ventures SA is the second largest shareholder owning 10% of common stock, and General Atlantic Service Company, L.P. holds about 9.9% of the company stock. Furthermore, CEO Saurabh Saha is the owner of 0.9% of the company's shares.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Centessa Pharmaceuticals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our most recent data indicates that insiders own some shares in Centessa Pharmaceuticals plc. It has a market capitalization of just US$590m, and insiders have US$17m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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 an ownership of 41%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Centessa Pharmaceuticals better, we need to consider many other factors. Be aware that Centessa Pharmaceuticals is showing 5 warning signs in our investment analysis , and 2 of those are a bit concerning...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.