Institutions along with individual investors who hold considerable shares inPLx Pharma Inc. (NASDAQ:PLXP) come under pressure; lose 18% of holdings value

By
Simply Wall St
Published
January 24, 2022
NasdaqCM:PLXP
Source: Shutterstock

If you want to know who really controls PLx Pharma Inc. (NASDAQ:PLXP), then you'll have to look at the makeup of its share registry. With 49% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 34% came under pressure after market cap dropped to US$158m last week,individual investors took the most losses.

In the chart below, we zoom in on the different ownership groups of PLx Pharma.

Check out our latest analysis for PLx Pharma

ownership-breakdown
NasdaqCM:PLXP Ownership Breakdown January 24th 2022

What Does The Institutional Ownership Tell Us About PLx Pharma?

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 PLx Pharma. 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. 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 PLx Pharma, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqCM:PLXP Earnings and Revenue Growth January 24th 2022

Our data indicates that hedge funds own 12% of PLx Pharma. 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. MSD Partners, L.P. is currently the largest shareholder, with 6.8% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.3% and 4.8%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 PLx Pharma

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 PLx Pharma Inc.. In their own names, insiders own US$8.0m worth of stock in the US$158m 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

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PLx Pharma. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that PLx Pharma is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

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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