Private equity firms who have a significant stake must be disappointed along with institutions after Monte Rosa Therapeutics, Inc.'s (NASDAQ:GLUE) market cap dropped by US$158m

By
Simply Wall St
Published
November 18, 2021
NasdaqGS:GLUE
Source: Shutterstock

A look at the shareholders of Monte Rosa Therapeutics, Inc. (NASDAQ:GLUE) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 33% came under pressure after market cap dropped to US$987m last week,private equity firms took the most losses.

Let's delve deeper into each type of owner of Monte Rosa Therapeutics, beginning with the chart below.

View our latest analysis for Monte Rosa Therapeutics

ownership-breakdown
NasdaqGS:GLUE Ownership Breakdown November 19th 2021

What Does The Institutional Ownership Tell Us About Monte Rosa Therapeutics?

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 Monte Rosa Therapeutics does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Monte Rosa Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:GLUE Earnings and Revenue Growth November 19th 2021

Our data indicates that hedge funds own 14% of Monte Rosa Therapeutics. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Versant Venture Management, LLC is currently the company's largest shareholder with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 17% and 7.1% of the stock. In addition, we found that Markus Warmuth, the CEO has 0.9% of the shares allocated to their name.

Our research also brought to light the fact that roughly 56% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Monte Rosa Therapeutics

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.

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 information suggests that Monte Rosa Therapeutics, Inc. insiders own under 1% of the company. It has a market capitalization of just US$987m, and the board has only US$9.1m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Monte Rosa Therapeutics. 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 a stake of 36%, private equity firms could influence the Monte Rosa Therapeutics board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Monte Rosa Therapeutics you should be aware of, and 2 of them are 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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