Fortress Biotech, Inc.'s (NASDAQ:FBIO) market cap dropped US$24m last week; Individual investors bore the brunt

By
Simply Wall St
Published
February 23, 2022
NasdaqCM:FBIO
Source: Shutterstock

A look at the shareholders of Fortress Biotech, Inc. (NASDAQ:FBIO) can tell us which group is most powerful. With 36% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 13% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 31% stock also took a hit.

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

See our latest analysis for Fortress Biotech

ownership-breakdown
NasdaqCM:FBIO Ownership Breakdown February 23rd 2022

What Does The Institutional Ownership Tell Us About Fortress Biotech?

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 Fortress Biotech does have institutional investors; and they hold a good portion of the company's stock. 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 Fortress Biotech's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqCM:FBIO Earnings and Revenue Growth February 23rd 2022

It looks like hedge funds own 9.1% of Fortress Biotech shares. 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 suggests that Michael Weiss, who is also the company's Senior Key Executive, holds the most number of shares at 11%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Meanwhile, the second and third largest shareholders, hold 11% and 9.1%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Lindsay Rosenwald is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Fortress Biotech

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Fortress Biotech, Inc.. It has a market capitalization of just US$163m, and insiders have US$50m 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

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Fortress Biotech. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Fortress Biotech better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Fortress Biotech .

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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