Stock Analysis

Provention Bio, Inc.'s (NASDAQ:PRVB) market cap touched US$2.2b last week, benefiting both individual investors who own 43% as well as institutions

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Key Insights

  • Provention Bio's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
  • 49% of the business is held by the top 25 shareholders
  • 31% of Provention Bio is held by Institutions

A look at the shareholders of Provention Bio, Inc. (NASDAQ:PRVB) can tell us which group is most powerful. With 43% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s US$1.5b market cap gain, institutions too had a 31% share in those profits.

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

See our latest analysis for Provention Bio

NasdaqGS:PRVB Ownership Breakdown March 14th 2023

What Does The Institutional Ownership Tell Us About Provention Bio?

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.

Provention Bio already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Provention Bio's earnings history below. Of course, the future is what really matters.

NasdaqGS:PRVB Earnings and Revenue Growth March 14th 2023

It looks like hedge funds own 19% of Provention Bio shares. 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. Sessa Capital IM, L.P. is currently the largest shareholder, with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.2% and 6.0%, of the shares outstanding, respectively. Additionally, the company's CEO Ashleigh Palmer directly holds 2.9% of the total shares outstanding.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 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 Provention Bio

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Provention Bio, Inc.. The insiders have a meaningful stake worth US$127m. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 43% stake in Provention 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with Provention Bio (including 1 which shouldn'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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