Aroa Biosurgery Limited's (ASX:ARX) market cap rose AU$24m last week; individual investors who hold 43% profited and so did insiders

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editorial-team@simplywallst.com (Simply Wall St)

Tue, Jun 11, 2024, 11:48 PM 4 min read

A look at the shareholders of Aroa Biosurgery Limited (ASX:ARX) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 13% price gain, insiders also received a 29% cut.

In the chart below, we zoom in on the different ownership groups of Aroa Biosurgery.

Check out our latest analysis for Aroa Biosurgery

ownership-breakdown — ASX:ARX Ownership Breakdown June 12th 2024

What Does The Institutional Ownership Tell Us About Aroa Biosurgery?

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.

As you can see, institutional investors have a fair amount of stake in Aroa Biosurgery. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Aroa Biosurgery's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — ASX:ARX Earnings and Revenue Growth June 12th 2024

We note that hedge funds don't have a meaningful investment in Aroa Biosurgery. The company's CEO Brian Ward is the largest shareholder with 9.6% of shares outstanding. Harbour Asset Management Limited is the second largest shareholder owning 6.6% of common stock, and Philip McCaw holds about 5.8% of the company stock. Interestingly, the third-largest shareholder, Philip McCaw is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Aroa Biosurgery

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in Aroa Biosurgery Limited. Insiders own AU$61m worth of shares in the AU$213m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 43% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Aroa Biosurgery better, we need to consider many other factors.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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.

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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.