Do Insiders Own Lots Of Shares In Faron Pharmaceuticals Oy (LON:FARN)?

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Simply Wall St

Tue, Dec 29, 2020, 7:39 PM 5 min read

If you want to know who really controls Faron Pharmaceuticals Oy (LON:FARN), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. 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.

With a market capitalization of UK£123m, Faron Pharmaceuticals Oy is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Faron Pharmaceuticals Oy.

Check out our latest analysis for Faron Pharmaceuticals Oy

ownership-breakdown — AIM:FARN Ownership Breakdown December 30th 2020

What Does The Institutional Ownership Tell Us About Faron Pharmaceuticals Oy?

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 Faron Pharmaceuticals Oy does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Faron Pharmaceuticals Oy's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — AIM:FARN Earnings and Revenue Growth December 30th 2020

Faron Pharmaceuticals Oy is not owned by hedge funds. Timo Syrjälä is currently the largest shareholder, with 14% of shares outstanding. With 7.6% and 7.3% of the shares outstanding respectively, Tom-Erik Lind and A&B (HK) Company Limited are the second and third largest shareholders. In addition, we found that Markku Jalkanen, the CEO has 6.8% of the shares allocated to his name

We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Faron Pharmaceuticals Oy

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 Faron Pharmaceuticals Oy. Insiders have a UK£44m stake in this UK£123m business. 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 47% ownership, the general public have some degree of sway over Faron Pharmaceuticals Oy. 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 Company Ownership

Our data indicates that Private Companies hold 7.3%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Take risks for example - Faron Pharmaceuticals Oy has 6 warning signs (and 3 which don't sit too well with us) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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.

This article by Simply Wall St is general in nature. 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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