April 22, 2024
Funds

Fennec Pharmaceuticals Inc.’s (NASDAQ:FENC) large hedge funds owners must be happy as stock continues to impress, up 10% over the past week


Key Insights

  • Given the large stake in the stock by institutions, Fennec Pharmaceuticals’ stock price might be vulnerable to their trading decisions
  • 50% of the business is held by the top 5 shareholders
  • Insiders have sold recently

If you want to know who really controls Fennec Pharmaceuticals Inc. (NASDAQ:FENC), then you’ll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are hedge funds with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, hedge funds investors ended up benefitting the most after the company hit US$293m in market cap. One-year return to shareholders is currently 12% and last week’s gain was the icing on the cake.

Let’s take a closer look to see what the different types of shareholders can tell us about Fennec Pharmaceuticals.

Check out our latest analysis for Fennec Pharmaceuticals

NasdaqCM:FENC Ownership Breakdown December 23rd 2023

What Does The Institutional Ownership Tell Us About Fennec Pharmaceuticals?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Fennec 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. 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 Fennec Pharmaceuticals’ historic earnings and revenue below, but keep in mind there’s always more to the story.

NasdaqCM:FENC Earnings and Revenue Growth December 23rd 2023

It looks like hedge funds own 31% of Fennec Pharmaceuticals shares. 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. Southpoint Capital Advisors LP is currently the company’s largest shareholder with 15% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 9.0%, of the shares outstanding, respectively. Furthermore, CEO Rostislav Raykov is the owner of 1.1% of the company’s shares.

To make our study more interesting, we found that the top 5 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Fennec Pharmaceuticals

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can see that insiders own shares in Fennec Pharmaceuticals Inc.. It has a market capitalization of just US$293m, and insiders have US$9.4m 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 28% 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 Company Ownership

Our data indicates that Private Companies hold 15%, of the company’s shares. It’s hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Fennec Pharmaceuticals better, we need to consider many other factors. Case in point: We’ve spotted 2 warning signs for Fennec Pharmaceuticals you should be aware of, and 1 of them is a bit concerning.

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.

Find out whether Fennec Pharmaceuticals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.



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