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Institutions profited after Inozyme Pharma, Inc.'s (NASDAQ:INZY) market cap rose US$19m last week butprivate equity firms profited the most

A look at the shareholders of Inozyme Pharma, Inc. (NASDAQ:INZY) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 47% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 20% increase in the stock price last week, private equity firms profited the most, but institutions who own 21% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Inozyme Pharma.

View our latest analysis for Inozyme Pharma

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About Inozyme Pharma?

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.

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We can see that Inozyme Pharma 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. 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 Inozyme Pharma, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
earnings-and-revenue-growth

It looks like hedge funds own 19% of Inozyme Pharma shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Longitude Capital Management Co., LLC is the largest shareholder with 10% of shares outstanding. Sofinnova Investment, Inc. is the second largest shareholder owning 9.0% of common stock, and Deep Track Capital, LP holds about 8.0% of the company stock. Furthermore, CEO Axel Bolte is the owner of 0.6% of the company's shares.

We did some more digging and found that 7 of the top shareholders account for roughly 54% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Inozyme Pharma

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. 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 report that insiders do own shares in Inozyme Pharma, Inc.. In their own names, insiders own US$1.7m worth of stock in the US$116m company. 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 12% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

With a stake of 47%, private equity firms could influence the Inozyme Pharma board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Inozyme Pharma (at least 3 which are concerning) , and understanding them should be part of your investment process.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

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