Home Private Equity Institutions own 24% of PepGen Inc. (NASDAQ:PEPG) shares but private equity firms...

Institutions own 24% of PepGen Inc. (NASDAQ:PEPG) shares but private equity firms control 54% of the company

24
0

Key Insights

  • Significant control over PepGen by private equity firms implies that the general public has more power to influence management and governance-related decisions

  • A total of 2 investors have a majority stake in the company with 54% ownership

  • Recent purchases by insiders

To get a sense of who is truly in control of PepGen Inc. (NASDAQ:PEPG), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And institutions on the other hand have a 24% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

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

See our latest analysis for PepGen

ownership-breakdownownership-breakdown

ownership-breakdown

What Does The Institutional Ownership Tell Us About PepGen?

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.

PepGen already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of PepGen, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growthearnings-and-revenue-growth

earnings-and-revenue-growth

It would appear that 6.2% of PepGen shares are controlled by hedge funds. 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. RA Capital Management, L.P. is currently the largest shareholder, with 34% of shares outstanding. For context, the second largest shareholder holds about 20% of the shares outstanding, followed by an ownership of 6.2% by the third-largest shareholder.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 54% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. 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 PepGen

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.

Our data suggests that insiders own under 1% of PepGen Inc. in their own names. It seems the board members have no more than US$542k worth of shares in the US$166m company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in PepGen. 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

Private equity firms hold a 54% stake in PepGen. This suggests they can be influential in key policy decisions. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We’ve spotted 3 warning signs for PepGen you should be aware of, and 1 of them can’t be ignored.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here