Every investor in CervoMed Inc. (NASDAQ:CRVO) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 35% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And looking at our data, we can see that insiders have bought shares recently. This might indicate that they expect share prices to rise in the near future.
Let's take a closer look to see what the different types of shareholders can tell us about CervoMed.
NasdaqCM:CRVO Ownership Breakdown September 21st 2024
What Does The Institutional Ownership Tell Us About CervoMed?
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.
As you can see, institutional investors have a fair amount of stake in CervoMed. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 CervoMed's historic earnings and revenue below, but keep in mind there's always more to the story.
NasdaqCM:CRVO Earnings and Revenue Growth September 21st 2024
Our data indicates that hedge funds own 7.8% of CervoMed. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Joshua Boger is currently the company's largest shareholder with 13% of shares outstanding. RA Capital Management, L.P. is the second largest shareholder owning 9.9% of common stock, and Sylvie Gregoire holds about 8.9% of the company stock. Sylvie Gregoire, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. In addition, we found that John Alam, the CEO has 8.9% 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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of CervoMed
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our most recent data indicates that insiders own a reasonable proportion of CervoMed Inc.. It has a market capitalization of just US$144m, and insiders have US$51m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CervoMed. 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 9.9%, private equity firms could influence the CervoMed 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:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with CervoMed (at least 2 which are a bit concerning) , and understanding them should be part of your investment process.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts.
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.
