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Ocumension Therapeutics' (HKG:1477) Largest Shareholders Are Private Equity Firms Who Were Rewarded as Market Cap Surged HK$632m Last Week

Simply Wall St ·  Aug 23, 2022 19:25

Every investor in Ocumension Therapeutics (HKG:1477) should be aware of the most powerful shareholder groups. With 44% stake, private equity firms possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private equity firms were the biggest beneficiaries of last week's 8.3% gain.

In the chart below, we zoom in on the different ownership groups of Ocumension Therapeutics.

Check out our latest analysis for Ocumension Therapeutics

ownership-breakdownSEHK:1477 Ownership Breakdown August 23rd 2022

What Does The Institutional Ownership Tell Us About Ocumension Therapeutics?

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.

As you can see, institutional investors have a fair amount of stake in Ocumension Therapeutics. 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. 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 Ocumension Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growthSEHK:1477 Earnings and Revenue Growth August 23rd 2022

Hedge funds don't have many shares in Ocumension Therapeutics. The company's largest shareholder is 6 Dimensions Capital, L.P., with ownership of 24%. With 13% and 12% of the shares outstanding respectively, Lian Yong Chen and Boyu Capital Consultancy Co., Ltd. are the second and third largest shareholders. Furthermore, CEO Ye Liu is the owner of 2.6% of the company's shares.

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 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 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 Ocumension Therapeutics

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.

It seems insiders own a significant proportion of Ocumension Therapeutics. It is very interesting to see that insiders have a meaningful HK$1.3b stake in this HK$8.2b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Ocumension Therapeutics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 44%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Ocumension Therapeutics you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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