Insiders of Tectonic Therapeutic, Inc. (NASDAQ:TECX) were rewarded after last week’s 10% gain

Key Insights

• Insiders appear to have a vested interest in Tectonic Therapeutic's growth, as seen by their sizeable ownership
• The top 4 shareholders own 52% of the company
• Insiders have been buying lately

If you want to know who really controls Tectonic Therapeutic, Inc. (NASDAQ:TECX), then you'll have to look at the makeup of its share registry. We can see that individual insiders own the lion's share in the company with 41% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

A quick look at our data suggests that insiders have been buying shares in the company recently and their bets paid off last week after the stock gained 10%.

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

Check out our latest analysis for Tectonic Therapeutic

What Does The Institutional Ownership Tell Us About Tectonic Therapeutic?

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 Tectonic Therapeutic. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Tectonic Therapeutic's historic earnings and revenue below, but keep in mind there's always more to the story.

It would appear that 5.8% of Tectonic Therapeutic shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Timothy Springer is currently the company's largest shareholder with 30% of shares outstanding. With 7.7% and 7.3% of the shares outstanding respectively, Polaris Venture Partners, Inc. and FMR LLC are the second and third largest shareholders. Additionally, the company's CEO Alise Reicin directly holds 2.0% of the total shares outstanding.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Tectonic Therapeutic

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Tectonic Therapeutic, Inc.. Insiders have a US$268m stake in this US$648m business. 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-- 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 an ownership of 15%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Tectonic Therapeutic better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Tectonic Therapeutic (at least 2 which make us uncomfortable) , and understanding them should be part of your investment process.

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.