Champions Oncology, Inc.'s (NASDAQ:CSBR) market cap up US$26m last week, benefiting both private equity firms who own 30% as well as insiders

Key Insights

• The considerable ownership by private equity firms in Champions Oncology indicates that they collectively have a greater say in management and business strategy
• A total of 6 investors have a majority stake in the company with 56% ownership
• 26% of Champions Oncology is held by insiders

Every investor in Champions Oncology, Inc. (NASDAQ:CSBR) 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 30% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 23% increase in the stock price last week, private equity firms profited the most, but insiders who own 26% stock also stood to gain from the increase.

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

See our latest analysis for Champions Oncology

What Does The Institutional Ownership Tell Us About Champions Oncology?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Champions Oncology. 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. 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 Champions Oncology, (below). Of course, keep in mind that there are other factors to consider, too.

It would appear that 6.4% of Champions Oncology shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Looking at our data, we can see that the largest shareholder is Battery Ventures L.P. with 18% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 7.0% by the third-largest shareholder. Joel Ackerman, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. In addition, we found that Ronnie Morris, the CEO has 6.3% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 6 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Champions Oncology

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of Champions Oncology, Inc.. It has a market capitalization of just US$130m, and insiders have US$34m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 25% 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

Private equity firms hold a 30% stake in Champions Oncology. This suggests they can be influential in key policy decisions. 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. For example, we've discovered 2 warning signs for Champions Oncology 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.