Yahoo Finance What Kind Of Shareholders Hold The Majority In Summit Therapeutics Inc.'s (NASDAQ:SMMT) Shares?
The big shareholder groups in Summit Therapeutics Inc. (NASDAQ:SMMT) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
Summit Therapeutics is not a large company by global standards. It has a market capitalization of US$110m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Summit Therapeutics.
See our latest analysis for Summit Therapeutics
What Does The Institutional Ownership Tell Us About Summit 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 Summit Therapeutics 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. 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 Summit Therapeutics' historic earnings and revenue below, but keep in mind there's always more to the story.
Summit Therapeutics is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Robert Duggan with 69% of shares outstanding. This essentially means that they have significant control over the outcome or future of the company, which is why insider ownership is usually looked upon favourably by prospective buyers. For context, the second largest shareholder holds about 6.2% of the shares outstanding, followed by an ownership of 2.7% by the third-largest shareholder. Interestingly, the third-largest shareholder, Mahkam Zanganeh is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Summit Therapeutics
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
It seems that insiders own more than half the Summit Therapeutics Inc. stock. This gives them a lot of power. Given it has a market cap of US$110m, that means they have US$79m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Summit Therapeutics. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Summit Therapeutics better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for Summit Therapeutics you should be aware of, and 2 of them are concerning.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.
