Who Are The Largest Shareholders In Eleven Biotherapeutics Inc (NASDAQ:EBIO)?

Kelly Murphy

Updated Sun, Apr 22, 2018, 6:26 AM

In this article, I’m going to take a look at Eleven Biotherapeutics Inc’s (NASDAQ:EBIO) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. Since the same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, it is a useful exercise to deconstruct EBIO’s shareholder registry.

View our latest analysis for Eleven Biotherapeutics

NasdaqGM:EBIO Ownership_summary Apr 22nd 18

Institutional Ownership

Institutional investors typically buy and sell shares in large magnitudes which can significantly sway the share price, especially when there are relatively small amounts of shares available on the market to trade. EBIO has institutions holding a stake of just 7.56%, which should not be much of a concern in terms of excessive price volatility. But another factor to consider is the presence of hedge funds, who are notorious for active investing. In EBIO’s case, they make up 12.53% of ownership, indicating potential sharp stock price movements during significant transactions. I am going to further examine the stock’s other major shareholders to figure out how they can affect the company’s investment profile for the long-term investor.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. EBIO insiders hold a significant stake of 10.42% in the company. This level of insider ownership has been found to have a negative impact on companies with consistently low PE ratios (underperformers), while it has been positive in the case of high PE ratio firms (outperformers). It may be interesting to take a look at what company insiders have been doing with their holdings lately. Insider buying may be a sign of upbeat future expectations, however, selling doesn’t necessarily mean the opposite as insiders may be motivated by their personal financial needs.

General Public Ownership

A big stake of 58.25% in EBIO is held by the general public. With this size of ownership, retail investors can collectively play a role in major company policies that affect shareholders returns, including executive remuneration and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Equity Ownership

With an ownership of 11.23%, private equity firms are a major stakeholder in EBIO and are in a position to play an important role in shaping up corporate strategy with a focus on value creation. This is a positive sign for potential investors as these firms play an important role in aligning company policy with shareholder returns.

Next Steps:

While institutional ownership in EBIO is low, active hedge funds still have a significant stake in the company. This level of ownership is a non-fundamental factor that can impact stock prices in the short-term. A factor to consider is whether EBIO offers enough margin of safety compared to its intrinsic value. However, ownership structure should not be the only determining factor when you’re building an investment thesis for EBIO. Rather, you should be examining fundamental factors such as Eleven Biotherapeutics’s past track record and financial health. I urge you to complete your research by taking a look at the following:

Future Outlook: What are well-informed industry analysts predicting for EBIO’s future growth? Take a look at our free research report of analyst consensus for EBIO’s outlook.
Past Track Record: Has EBIO been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of EBIO’s historicals for more clarity.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.