Significant control over Champions Oncology by private equity firms implies that the general public has more power to influence management and governance-related decisions
A look at the shareholders of Champions Oncology, Inc. (NASDAQ:CSBR) can tell us which group is most powerful. We can see that private equity firms own the lion’s share in the company with 30% 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 benefitted the most from last week’s US$17m market cap gain, insiders too had a 26% share in those profits.
Let’s delve deeper into each type of owner of Champions Oncology, beginning with the chart below.
NasdaqCM:CSBR Ownership Breakdown December 22nd 2024
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.
Champions Oncology already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Champions Oncology, (below). Of course, keep in mind that there are other factors to consider, too.
NasdaqCM:CSBR Earnings and Revenue Growth December 22nd 2024
It looks like hedge funds own 6.4% of Champions Oncology shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Battery Ventures L.P. is the largest shareholder with 18% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 7.0% of the stock. Joel Ackerman, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. In addition, we found that Ronnie Morris, the CEO has 6.3% of the shares allocated to their name.
On further inspection, we found that more than half the company’s shares are owned by the top 6 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.
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.
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.
Our information suggests that insiders maintain a significant holding in Champions Oncology, Inc.. Insiders have a US$27m stake in this US$103m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Champions Oncology. 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 firms hold a 30% stake in Champions Oncology. 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we’ve spotted 2 warning signs for Champions Oncology you should know about.
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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