Yahoo Finance Graphite Bio, Inc.'s (NASDAQ:GRPH) largest shareholders are private equity firms with 43% ownership, institutions own 22%
Key Insights
Significant control over Graphite Bio by private equity firms implies that the general public has more power to influence management and governance-related decisions
58% of the business is held by the top 3 shareholders
To get a sense of who is truly in control of Graphite Bio, Inc. (NASDAQ:GRPH), 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 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And institutions on the other hand have a 22% ownership in the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.
In the chart below, we zoom in on the different ownership groups of Graphite Bio.
See our latest analysis for Graphite Bio
What Does The Institutional Ownership Tell Us About Graphite Bio?
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.
We can see that Graphite Bio does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Graphite Bio's earnings history below. Of course, the future is what really matters.
Our data indicates that hedge funds own 15% of Graphite Bio. 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. Versant Venture Management, LLC is currently the company's largest shareholder with 28% of shares outstanding. The second and third largest shareholders are EcoR1 Capital, LLC and Samsara BioCapital LLC, with an equal amount of shares to their name at 15%. Furthermore, CEO Joshua Lehrer-Graiwer is the owner of 2.0% of the company's shares.
A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 58% 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 Graphite Bio
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 report that insiders do own shares in Graphite Bio, Inc.. It has a market capitalization of just US$174m, and insiders have US$17m worth of shares, in their own names. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 11% stake in the company, and hence can't easily be ignored. 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
With an ownership of 43%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Graphite Bio better, we need to consider many other factors. For instance, we've identified 3 warning signs for Graphite Bio (2 don't sit too well with us) that you should be aware of.
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.
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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.
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