Individual investors are KALA BIO, Inc.'s (NASDAQ:KALA) biggest owners and were rewarded after market cap rose by US$28m last week

Key Insights

• Significant control over KALA BIO by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 9 investors have a majority stake in the company with 52% ownership
• Institutional ownership in KALA BIO is 21%

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A look at the shareholders of KALA BIO, Inc. (NASDAQ:KALA) can tell us which group is most powerful. The group holding the most number of shares in the company, around 40% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, individual investors benefitted the most after the company's market cap rose by US$28m last week.

In the chart below, we zoom in on the different ownership groups of KALA BIO.

See our latest analysis for KALA BIO

What Does The Institutional Ownership Tell Us About KALA BIO?

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.

As you can see, institutional investors have a fair amount of stake in KALA BIO. 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. 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 KALA BIO's earnings history below. Of course, the future is what really matters.

It would appear that 26% of KALA BIO shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Our data shows that Baker Bros. Advisors LP is the largest shareholder with 17% of shares outstanding. The second and third largest shareholders are Cormorant Asset Management, LP and SR One Capital Management, LP, with an equal amount of shares to their name at 8.6%. Additionally, the company's CEO Todd Bazemore directly holds 0.7% of the total shares outstanding.

We did some more digging and found that 9 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 KALA BIO

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.

We can report that insiders do own shares in KALA BIO, Inc.. As individuals, the insiders collectively own US$5.5m worth of the US$105m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 40% stake in KALA BIO. 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 8.5%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand KALA BIO better, we need to consider many other factors. Take risks for example - KALA BIO has 7 warning signs (and 6 which are significant) we think you should know about.

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.