Institutional investors in Metagenomi, Inc. (NASDAQ:MGX) must be dismayed after prices dropped by 21% last week

Key Insights

• Institutions' substantial holdings in Metagenomi implies that they have significant influence over the company's share price
• A total of 10 investors have a majority stake in the company with 50% ownership
• Insider ownership in Metagenomi is 11%

To get a sense of who is truly in control of Metagenomi, Inc. (NASDAQ:MGX), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, institutional endured the biggest losses as the stock fell by 21%.

Let's take a closer look to see what the different types of shareholders can tell us about Metagenomi.

View our latest analysis for Metagenomi

What Does The Institutional Ownership Tell Us About Metagenomi?

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 Metagenomi. 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. 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 Metagenomi's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Metagenomi. Our data shows that Bayer Aktiengesellschaft is the largest shareholder with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.3% and 5.1% of the stock. Brian Thomas, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Metagenomi

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Metagenomi, Inc.. Insiders own US$12m worth of shares in the US$108m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Metagenomi. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 10% stake in Metagenomi. This suggests they can be influential in key policy decisions. 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.

Public Company Ownership

We can see that public companies hold 15% of the Metagenomi shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Metagenomi better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Metagenomi you should be aware of, and 1 of them is significant.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.