Rhythm Biosciences Limited (ASX:RHY) Share Price Falls 12% Last Week; individual investors would not be happy
To get an idea of who actually controls Rhythm Biosciences Limited (ASX:RHY), it is important to understand the ownership structure of the company. The group holding the largest number of shares in the company, around 44% to be precise, are individual investors. In other words, the group faces the maximum upside potential (or downside risk).
After a 12% drop in the share price last week, individual investors suffered the most losses, but insiders who own 43% of the shares were also affected.
Let’s dig deeper into each owner type in Rhythm Biosciences, starting with the table below.
Discover our latest analyzes for Rhythm Biosciences
What does the lack of institutional ownership tell us about the biosciences of rhythm?
Small companies that are not very actively traded often lack institutional investors, but it is less common to see large companies without them.
There can be various reasons why no institution owns shares in a company. Typically, small newly listed companies do not attract much attention from fund managers, as it would not be possible for large fund managers to gain a significant position in the company. Alternatively, there could be something about the company that has kept institutional investors away. Institutional investors may not find the company’s historic growth impressive, or there may be other factors at play. You can see Rhythm Biosciences’ past revenue performance for yourself below.
We note that hedge funds have no significant investment in Rhythm Biosciences. From our data, we deduce that the largest shareholder is Otto Buttula (who also holds the title of Top Key Executive) with 13% of the shares outstanding. It’s generally considered a good sign when insiders hold a significant amount of stock in the company, and in that case, we’re happy to see a company insider act as a key stakeholder. The second and third largest shareholders are Michelle Wing and Adrien Wing, with an equal number of shares to their names at 9.0%. Additionally, the company’s CEO, Glenn Gilbert, directly owns 0.6% of the total shares outstanding.
Looking at the shareholder register, we can see that 50% of the ownership is controlled by the 14 major shareholders, which means that no shareholder has a controlling interest in the ownership.
While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. We don’t see any analyst coverage of the stock at this time, so the company is unlikely to be widely held.
Insider Property of Rhythm Biosciences
The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
It appears that insiders own a large share of Rhythm Biosciences Limited. Insiders have an A$96 million stake in the A$225 million business. It’s great to see insiders so invested in the company. It might be worth checking to see if these insiders have bought recently.
General public property
The general public, generally individual investors, holds 44% of the capital of Rhythm Biosciences. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.
Private Company Ownership
We can see that private companies hold 11% of the issued shares. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.
I find it very interesting to see who exactly owns a business. But to really get insight, we also need to consider other information. Know that Rhythm Biosciences shows 4 warning signs in our investment analysis and 1 of them does not suit us too much…
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, supported by solid financial data.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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