Recent 15% decline may not have gone down well with Greenwich LifeSciences, Inc. (NASDAQ:GLSI) insiders who've been purchasing recently

Key Insights

• Significant insider control over Greenwich LifeSciences implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 53% ownership
• Recent purchases by insiders

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

To get a sense of who is truly in control of Greenwich LifeSciences, Inc. (NASDAQ:GLSI), it is important to understand the ownership structure of the business. With 55% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

A quick look at our data suggests that insiders have been buying shares in the company recently. Their expectations, however, were not satisfied, as the market cap dropped to US$134m over the past week.

In the chart below, we zoom in on the different ownership groups of Greenwich LifeSciences.

Check out our latest analysis for Greenwich LifeSciences

What Does The Institutional Ownership Tell Us About Greenwich LifeSciences?

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

Hedge funds don't have many shares in Greenwich LifeSciences. With a 42% stake, CEO Snehal Patel is the largest shareholder. For context, the second largest shareholder holds about 4.7% of the shares outstanding, followed by an ownership of 3.0% by the third-largest shareholder. Interestingly, the third-largest shareholder, Kenneth Hallock is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 53% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Greenwich LifeSciences

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 the majority of Greenwich LifeSciences, Inc.. This means they can collectively make decisions for the company. Given it has a market cap of US$134m, that means they have US$74m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 35% 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.

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Greenwich LifeSciences (of which 2 can't be ignored!) you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.