Home Private Equity While institutions invested in NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) benefited from last...

While institutions invested in NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) benefited from last week’s 6.7% gain, private equity firms stood to gain the most

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Key Insights

Every investor in NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 52% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While private equity firms were the group that reaped the most benefits after last week’s 6.7% price gain, institutions also received a 18% cut.

In the chart below, we zoom in on the different ownership groups of NewAmsterdam Pharma.

View our latest analysis for NewAmsterdam Pharma

NasdaqGM:NAMS Ownership Breakdown January 3rd 2024

What Does The Institutional Ownership Tell Us About NewAmsterdam Pharma?

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.

NewAmsterdam Pharma 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. 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 NewAmsterdam Pharma’s historic earnings and revenue below, but keep in mind there’s always more to the story.

NasdaqGM:NAMS Earnings and Revenue Growth January 3rd 2024

It would appear that 9.7% of NewAmsterdam Pharma 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. The company’s largest shareholder is Forbion Capital Partners B.V., with ownership of 14%. In comparison, the second and third largest shareholders hold about 13% and 11% of the stock. In addition, we found that Michael Davidson, the CEO has 1.7% of the shares allocated to their name.

On looking further, we found that 56% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of NewAmsterdam Pharma

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.

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.

Shareholders would probably be interested to learn that insiders own shares in NewAmsterdam Pharma Company N.V.. In their own names, insiders own US$20m worth of stock in the US$984m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NewAmsterdam Pharma. 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

Private equity firms hold a 52% stake in NewAmsterdam Pharma. 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.

Private Company Ownership

It seems that Private Companies own 3.0%, of the NewAmsterdam Pharma stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand NewAmsterdam Pharma better, we need to consider many other factors. Take risks for example – NewAmsterdam Pharma has 2 warning signs we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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 NewAmsterdam Pharma 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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