Insiders of Nautilus Biotechnology, Inc. (NASDAQ:NAUT) must be frustrated after market cap dropped US$82m since recent purchases

By
Simply Wall St
Published
January 19, 2022
NasdaqGS:NAUT
Source: Shutterstock

A look at the shareholders of Nautilus Biotechnology, Inc. (NASDAQ:NAUT) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 32% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

A quick look at our data suggests that insiders have been buying shares in the company recently. So the news of stock price falling by 14% is not something they might have been expecting soon after purchasing shares.

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

See our latest analysis for Nautilus Biotechnology

ownership-breakdown
NasdaqGS:NAUT Ownership Breakdown January 19th 2022

What Does The Institutional Ownership Tell Us About Nautilus Biotechnology?

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.

Nautilus Biotechnology already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Nautilus Biotechnology, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:NAUT Earnings and Revenue Growth January 19th 2022

Nautilus Biotechnology is not owned by hedge funds. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Nautilus Biotechnology's case, its Chief Scientific Officer, Parag Mallick, is the largest shareholder, holding 16% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 14% and 14%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Sujal Patel is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Nautilus Biotechnology

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 information suggests that insiders maintain a significant holding in Nautilus Biotechnology, Inc.. It has a market capitalization of just US$514m, and insiders have US$166m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 27%, private equity firms could influence the Nautilus Biotechnology board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 3.3%, of the Nautilus Biotechnology stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Nautilus Biotechnology (at least 2 which can't be ignored) , and understanding them should be part of your investment process.

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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