Institutions along with individual investors who hold considerable shares inEledon Pharmaceuticals, Inc. (NASDAQ:ELDN) come under pressure; lose 16% of holdings value

Key Insights

• Eledon Pharmaceuticals' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 25 shareholders own 43% of the company
• 20% of Eledon Pharmaceuticals is held by Institutions

To get a sense of who is truly in control of Eledon Pharmaceuticals, Inc. (NASDAQ:ELDN), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual investors with 57% 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 16% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 20% stock also took a hit.

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

View our latest analysis for Eledon Pharmaceuticals

What Does The Institutional Ownership Tell Us About Eledon Pharmaceuticals?

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.

Eledon Pharmaceuticals already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Eledon Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.

It would appear that 11% of Eledon Pharmaceuticals 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. The company's largest shareholder is BVF Partners L.P., with ownership of 11%. The second and third largest shareholders are RA Capital Management, L.P. and Frazier Life Sciences Management, LP, with an equal amount of shares to their name at 6.0%.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Eledon Pharmaceuticals

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

Our data suggests that insiders own under 1% of Eledon Pharmaceuticals, Inc. in their own names. It appears that the board holds about US$124k worth of stock. This compares to a market capitalization of US$288m. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public -- including retail investors -- own 57% of Eledon Pharmaceuticals. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Equity Ownership

Private equity firms hold a 12% stake in Eledon Pharmaceuticals. 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. To that end, you should learn about the 6 warning signs we've spotted with Eledon Pharmaceuticals (including 4 which don't sit too well with us) .

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.