Sagimet Biosciences Inc.'s (NASDAQ:SGMT) market cap dropped US$22m last week; individual investors who hold 46% were hit as were institutions

Key Insights

• The considerable ownership by retail investors in Sagimet Biosciences indicates that they collectively have a greater say in management and business strategy
• A total of 24 investors have a majority stake in the company with 50% ownership
• Recent sales by insiders

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To get a sense of who is truly in control of Sagimet Biosciences Inc. (NASDAQ:SGMT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 29% shares weren’t spared from last week’s US$22m market cap drop, retail investors as a group suffered the maximum losses

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

See our latest analysis for Sagimet Biosciences

What Does The Institutional Ownership Tell Us About Sagimet Biosciences?

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.

Sagimet Biosciences 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. 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 Sagimet Biosciences' earnings history below. Of course, the future is what really matters.

Our data indicates that hedge funds own 7.8% of Sagimet Biosciences. 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. Woodline Partners LP is currently the company's largest shareholder with 7.8% of shares outstanding. With 5.8% and 5.1% of the shares outstanding respectively, Kleiner Perkins Caufield & Byers and Jinzi Jason Wu are the second and third largest shareholders. Furthermore, CEO David Happel is the owner of 0.8% of the company's shares.

After doing some more digging, we found that the top 24 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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

Insider Ownership Of Sagimet Biosciences

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.

Our most recent data indicates that insiders own some shares in Sagimet Biosciences Inc.. It has a market capitalization of just US$207m, and insiders have US$15m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 46% stake in the company, and hence can't easily be ignored. 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.

Private Equity Ownership

Private equity firms hold a 5.8% stake in Sagimet Biosciences. 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

It appears to us that public companies own 4.6% of Sagimet Biosciences. 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 Sagimet Biosciences better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 5 warning signs for Sagimet Biosciences (of which 2 are concerning!) you should know about.

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.