Yahoo Finance REGENXBIO Inc.'s (NASDAQ:RGNX) recent 7.9% pullback adds to one-year year losses, institutional owners may take drastic measures
Key Insights
Significantly high institutional ownership implies REGENXBIO's stock price is sensitive to their trading actions
53% of the business is held by the top 6 shareholders
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
A look at the shareholders of REGENXBIO Inc. (NASDAQ:RGNX) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 72% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$884m last week after a 7.9% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 7.4% might not go down well especially with this category of shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. Hence, if weakness in REGENXBIO's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.
Let's delve deeper into each type of owner of REGENXBIO, beginning with the chart below.
View our latest analysis for REGENXBIO
What Does The Institutional Ownership Tell Us About REGENXBIO?
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.
REGENXBIO already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 REGENXBIO's historic earnings and revenue below, but keep in mind there's always more to the story.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. It would appear that 7.7% of REGENXBIO 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. BlackRock, Inc. is currently the largest shareholder, with 17% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.1% and 7.8%, of the shares outstanding, respectively. Furthermore, CEO Kenneth Mills is the owner of 0.6% of the company's shares.
We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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 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 REGENXBIO
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.
Shareholders would probably be interested to learn that insiders own shares in REGENXBIO Inc.. As individuals, the insiders collectively own US$67m worth of the US$884m company. 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
With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over REGENXBIO. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand REGENXBIO better, we need to consider many other factors. Take risks for example - REGENXBIO has 3 warning signs we think you should be aware of.
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.
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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.
