Stock Analysis

Institutional owners may take dramatic actions as Amneal Pharmaceuticals, Inc.'s (NYSE:AMRX) recent 11% drop adds to one-year losses

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NYSE:AMRX
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If you want to know who really controls Amneal Pharmaceuticals, Inc. (NYSE:AMRX), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 42% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$637m last week after a 11% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 63% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Amneal Pharmaceuticals, which might have negative implications on individual investors.

In the chart below, we zoom in on the different ownership groups of Amneal Pharmaceuticals.

If you're not interested in researching AMRX's ownership structure, we have a free list of interesting investing ideas to potentially inspire your next investment!

ownership-breakdown
NYSE:AMRX Ownership Breakdown September 28th 2022

What Does The Institutional Ownership Tell Us About Amneal Pharmaceuticals?

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.

We can see that Amneal Pharmaceuticals does have institutional investors; and they hold a good portion of the company's stock. 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 Amneal Pharmaceuticals' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:AMRX Earnings and Revenue Growth September 28th 2022

Hedge funds don't have many shares in Amneal Pharmaceuticals. Fosun International Holdings Ltd. is currently the largest shareholder, with 12% of shares outstanding. TPG Capital, L.P. is the second largest shareholder owning 11% of common stock, and Gautam Patel holds about 8.7% of the company stock. Gautam Patel, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 Amneal Pharmaceuticals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own a reasonable proportion of Amneal Pharmaceuticals, Inc.. It has a market capitalization of just US$637m, and insiders have US$69m worth of shares in their own names. 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 23% 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

With a stake of 11%, private equity firms could influence the Amneal Pharmaceuticals board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 12%, of the Amneal Pharmaceuticals stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Valuation is complex, but we're helping make it simple.

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About NYSE:AMRX

Amneal Pharmaceuticals

Amneal Pharmaceuticals, Inc., together with its subsidiaries, develops, licenses, manufactures, markets, and distributes generic and specialty pharmaceutical products for various dosage forms and therapeutic areas.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth1
Past Performance0
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with adequate balance sheet.