Institutional investors may adopt severe steps after Harpoon Therapeutics, Inc.'s (NASDAQ:HARP) latest 17% drop adds to a year losses

By
Simply Wall St
Published
April 11, 2022
NasdaqGS:HARP
Source: Shutterstock

A look at the shareholders of Harpoon Therapeutics, Inc. (NASDAQ:HARP) can tell us which group is most powerful. The group holding the most number of shares in the company, around 36% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$137m last week after a 17% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 82% for shareholders. Often called “market makers”, institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Harpoon Therapeutics which might hurt individual investors.

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

See our latest analysis for Harpoon Therapeutics

ownership-breakdown
NasdaqGS:HARP Ownership Breakdown April 11th 2022

What Does The Institutional Ownership Tell Us About Harpoon Therapeutics?

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.

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

earnings-and-revenue-growth
NasdaqGS:HARP Earnings and Revenue Growth April 11th 2022

It looks like hedge funds own 16% of Harpoon Therapeutics shares. 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. Our data shows that Mpm Oncology Impact Management, L.P. is the largest shareholder with 9.7% of shares outstanding. The second and third largest shareholders are New Leaf Venture Partners, LLC and MPM Asset Management, L.L.C., with an equal amount of shares to their name at 9.6%.

We did some more digging and found that 6 of the top shareholders account for roughly 50% 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 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 Harpoon Therapeutics

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 some shares in Harpoon Therapeutics, Inc.. As individuals, the insiders collectively own US$1.7m worth of the US$137m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in Harpoon 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 an ownership of 35%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

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. Take risks for example - Harpoon Therapeutics has 2 warning signs we think you should be aware of.

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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