To get a sense of who is truly in control of La Jolla Pharmaceutical Company (NASDAQ:LJPC), it is important to understand the ownership structure of the business. With 43% stake, hedge funds 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).
After a year of 8.0% losses, last week’s 10% gain would be welcomed by hedge funds investors as a likely sign that returns might start trending higher.
Let's delve deeper into each type of owner of La Jolla Pharmaceutical, beginning with the chart below.
What Does The Institutional Ownership Tell Us About La Jolla Pharmaceutical?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in La Jolla Pharmaceutical. 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 La Jolla Pharmaceutical's earnings history below. Of course, the future is what really matters.
It looks like hedge funds own 43% of La Jolla Pharmaceutical 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. Looking at our data, we can see that the largest shareholder is Tang Capital Management, LLC with 35% of shares outstanding. RTW Investments, LP is the second largest shareholder owning 8.5% of common stock, and Tavistock Life Sciences holds about 3.2% of the company stock.
Our research also brought to light the fact that roughly 53% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of La Jolla Pharmaceutical
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.
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 most recent data indicates that insiders own some shares in La Jolla Pharmaceutical Company. It has a market capitalization of just US$135m, and insiders have US$1.7m worth of shares, in their own names. 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 33% stake in La Jolla Pharmaceutical. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
It's always worth thinking about the different groups who own shares in a company. But to understand La Jolla Pharmaceutical better, we need to consider many other factors. For example, we've discovered 3 warning signs for La Jolla Pharmaceutical (2 can't be ignored!) that you should be aware of before investing here.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.