Key Insights
- The considerable ownership by individual investors in Aurinia Pharmaceuticals indicates that they collectively have a greater say in management and business strategy
- A total of 25 investors have a majority stake in the company with 36% ownership
- Insiders have sold recently
A look at the shareholders of Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) can tell us which group is most powerful. We can see that individual investors own the lion’s share in the company with 56% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Individual investors gained the most after market cap touched US$725m last week, while institutions who own 35% also benefitted.
Let’s delve deeper into each type of owner of Aurinia Pharmaceuticals, beginning with the chart below.
View our latest analysis for Aurinia Pharmaceuticals
What Does The Institutional Ownership Tell Us About Aurinia 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.
As you can see, institutional investors have a fair amount of stake in Aurinia Pharmaceuticals. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Aurinia Pharmaceuticals’ historic earnings and revenue below, but keep in mind there’s always more to the story.
It looks like hedge funds own 6.6% of Aurinia Pharmaceuticals shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. The company’s largest shareholder is Armistice Capital LLC, with ownership of 6.6%. In comparison, the second and third largest shareholders hold about 6.2% and 4.4% of the stock.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Aurinia Pharmaceuticals
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
We can report that insiders do own shares in Aurinia Pharmaceuticals Inc.. It has a market capitalization of just US$725m, and insiders have US$11m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public — including retail investors — own 56% of Aurinia Pharmaceuticals. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Next Steps:
It’s always worth thinking about the different groups who own shares in a company. But to understand Aurinia Pharmaceuticals better, we need to consider many other factors. Be aware that Aurinia Pharmaceuticals is showing 1 warning sign in our investment analysis , you should know about…
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 Aurinia 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.
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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.
