Private equity firms in RVL Pharmaceuticals plc (NASDAQ:RVLP) are its biggest bettors, and their bets paid off as stock gained 11% last week
Simply Wall St
5 min read
To get a sense of who is truly in control of RVL Pharmaceuticals plc (NASDAQ:RVLP), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 40% to be precise, is private equity firms. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Clearly, private equity firms benefitted the most after the company's market cap rose by US$23m last week.
Let's delve deeper into each type of owner of RVL Pharmaceuticals, beginning with the chart below.
NasdaqGS:RVLP Ownership Breakdown September 4th 2022
What Does The Institutional Ownership Tell Us About RVL Pharmaceuticals?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in RVL Pharmaceuticals. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of RVL Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.
NasdaqGS:RVLP Earnings and Revenue Growth September 4th 2022
We note that hedge funds don't have a meaningful investment in RVL Pharmaceuticals. Looking at our data, we can see that the largest shareholder is Avista Capital Holdings, L.P. with 25% of shares outstanding. For context, the second largest shareholder holds about 24% of the shares outstanding, followed by an ownership of 15% by the third-largest shareholder. Additionally, the company's CEO Brian Markison directly holds 2.4% of the total shares outstanding.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 RVL Pharmaceuticals
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own some shares in RVL Pharmaceuticals plc. It has a market capitalization of just US$233m, and insiders have US$8.4m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over RVL Pharmaceuticals. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
With a stake of 40%, private equity firms could influence the RVL Pharmaceuticals 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.
Private Company Ownership
It seems that Private Companies own 24%, of the RVL Pharmaceuticals stock. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand RVL Pharmaceuticals better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for RVL Pharmaceuticals you should know about.
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.
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