Source: ShutterstockKey Insights
- Given the large stake in the stock by institutions, $Rigel Pharmaceuticals(RIGL)$ price might be vulnerable to their trading decisions
- 51% of the business is held by the top 13 shareholders
- Insiders have been selling lately
A look at the shareholders of Rigel Pharmaceuticals, Inc. (NASDAQ:RIGL) can tell us which group is most powerful. With 54% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
Last week's US$31m market cap gain would probably be appreciated by institutional investors, especially after a year of 45% losses.
In the chart below, zoom in on the different ownership groups of Rigel Pharmaceuticals.
NasdaqGS:RIGL Ownership Breakdown March 9th 2023
What Does The Institutional Ownership Tell Us About Rigel 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.
As you can see, institutional investors have a fair amount of stake in Rigel Pharmaceuticals. 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. 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 Rigel Pharmaceuticals, (below). Of course, keep in mind that there are other factors to consider, too.
NasdaqGS:RIGL Earnings and Revenue Growth March 9th 2023
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. It looks like hedge funds own 15% of Rigel Pharmaceuticals shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Armistice Capital, LLC is the largest shareholder with 9.8% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.5% of common stock, and The Vanguard Group, Inc. holds about 7.0% of the company stock. In addition, we found that Raul Rodriguez, the CEO has 0.7% of the shares allocated to their name.
After doing some more digging, we found that the top 13 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Rigel Pharmaceuticals
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 data suggests that insiders own under 1% of Rigel Pharmaceuticals, Inc. in their own names. It seems the board members have no more than US$2.5m worth of shares in the US$311m company. We generally like to see a board more invested. However it might be worth checkingif those insiders have been buying.
General Public Ownership
The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. 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.
source:simplywall
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