The considerable ownership by individual investors in Cipher Pharmaceuticals indicates that they collectively have a greater say in management and business strategy
A total of 9 investors have a majority stake in the company with 43% ownership
To get a sense of who is truly in control of Cipher Pharmaceuticals Inc. (TSE:CPH), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 57% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Individual insiders, on the other hand, account for 42% of the company's stockholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.
In the chart below, we zoom in on the different ownership groups of Cipher Pharmaceuticals.
What Does The Institutional Ownership Tell Us About Cipher Pharmaceuticals?
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.
Since institutions own only a small portion of Cipher Pharmaceuticals, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.
TSX:CPH Earnings and Revenue Growth February 4th 2025
We note that hedge funds don't have a meaningful investment in Cipher Pharmaceuticals. John Mull is currently the largest shareholder, with 37% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.2% and 1.4% of the stock. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Executive Officer and Lead Director, respectively, suggesting that these insiders have a personal stake in the company.
On studying our ownership data, we found that 9 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 Cipher Pharmaceuticals
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.
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 Cipher Pharmaceuticals Inc.. Insiders have a CA$146m stake in this CA$348m business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 57% of Cipher Pharmaceuticals shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Cipher Pharmaceuticals you should be aware of, and 1 of them is a bit concerning.
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.
