Yahoo Finance Cidara Therapeutics, Inc.'s (NASDAQ:CDTX) market cap surged US$21m last week, individual investors who have a lot riding on the company were rewarded
If you want to know who really controls Cidara Therapeutics, Inc. (NASDAQ:CDTX), then you'll have to look at the makeup of its share registry. With 50% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, individual investors were the biggest beneficiaries of last week’s 25% gain.
Let's delve deeper into each type of owner of Cidara Therapeutics, beginning with the chart below.
See our latest analysis for Cidara Therapeutics
What Does The Institutional Ownership Tell Us About Cidara Therapeutics?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Cidara Therapeutics does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Cidara Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.
It would appear that 21% of Cidara Therapeutics shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. BVF Partners L.P. is currently the company's largest shareholder with 9.6% of shares outstanding. Mundipharma International Limited is the second largest shareholder owning 6.7% of common stock, and Nantahala Capital Management, LLC holds about 6.4% of the company stock. Additionally, the company's CEO Jeffrey Stein directly holds 1.1% of the total shares outstanding.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Cidara Therapeutics
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.
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 see that insiders own shares in Cidara Therapeutics, Inc.. It has a market capitalization of just US$108m, and insiders have US$4.5m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 50% stake in the company, and hence can't easily be ignored. 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 Company Ownership
It seems that Private Companies own 6.7%, of the Cidara Therapeutics 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 3 warning signs for Cidara Therapeutics (1 doesn't sit too well with us!) that you should be aware of before investing here.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
