Why Vascular Biogenics Ltd's (NASDAQ:VBLT) Investor Composition Impacts Your Returns

In this analysis, my focus will be on developing a perspective on Vascular Biogenics Ltd’s (NASDAQ:VBLT) latest ownership structure, a less discussed, but important factor. Ownership structure of a company has been found to affect share performance over time. Differences in ownership structure of companies can have a profound effect on how management's incentives are aligned with shareholder returns, and whether they adhere to corporate governance best practices. Although this is an important factor for long-term investors, many investors can also be impacted by institutional presence and their high-volume trading. Now I will analyze VBLT's shareholder registry in more detail.

View our latest analysis for Vascular Biogenics

Institutional Ownership

Due to the big order sizes of institutional investors, a company's shares can experience large, one-sided momentum, driven by high volume of shares removed from, or injected into, the market. With an institutional ownership of 6.80%, VBLT doesn't seem too exposed to higher volatility resulting from institutional trading.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. A major group of owners of VBLT is individual insiders, sitting with a hefty 39.37% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). It's also interesting to learn what VBLT insiders have been doing with their shareholdings lately. While insider buying is possibly a sign of a positive outlook for the company, selling doesn't necessarily indicate a negative outlook as they may be selling to meet personal financial needs.

General Public Ownership

A big stake of 45.69% in VBLT is held by the general public. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Equity Ownership

With a stake of 5.58%, private equity firms form another important class of owners in VBLT. With a stake of 5.58%, they can influence VBLT's key policy decisions. An investor should be encouraged by the ownership of these institutions who are known to be experts in increasing efficiency, improving capital structure and opting for value-accretive policy decisions.

Private Company Ownership

Potential investors in VBLT should also look at another important group of investors: private companies, with a stake of 2.48%, who are primarily invested because of strategic and capital gain interests. However, an ownership of this size may be relatively insignificant, meaning that these shareholders may not have the potential to influence VBLT's business strategy. Thus, investors not need worry too much about the consequences of these holdings.

What this means for you:

Institutional ownership level and composition in VBLT is not high nor active enough to significantly impact its investment thesis. However, ownership structure should not be the only focus of your research when constructing an investment thesis around VBLT. Rather, you should be looking at fundamental drivers such as the intrinsic valuation, which is a key driver of Vascular Biogenics’s share price. I highly recommend you to complete your research by taking a look at the following:

• 1. Future Outlook: What are well-informed industry analysts predicting for VBLT’s future growth? Take a look at our free research report of analyst consensus for VBLT’s outlook.
• 2. Financial Health: Is VBLT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
• 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.