<!-- HTML_TAG_START -->NasdaqGM:RXST Ownership Breakdown December 20th 2024<!-- HTML_TAG_END -->
Significant control over TELA Bio by retail investors implies that the general public has more power to influence management and governance-related decisions
A look at the shareholders of TELA Bio, Inc. (NASDAQ:TELA) can tell us which group is most powerful. We can see that retail investors own the lion’s share in the company with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutions, on the other hand, account for 28% of the company’s stockholders. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.
In the chart below, we zoom in on the different ownership groups of TELA Bio.
NasdaqGM:TELA Ownership Breakdown January 12th 2025
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.
We can see that TELA Bio 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see TELA Bio’s historic earnings and revenue below, but keep in mind there’s always more to the story.
NasdaqGM:TELA Earnings and Revenue Growth January 12th 2025
It would appear that 7.2% of TELA Bio shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Essex Woodlands Management, Inc. is currently the largest shareholder, with 10% of shares outstanding. Stonepine Capital Management LLC is the second largest shareholder owning 7.2% of common stock, and Aigh Capital Management, LLC holds about 6.3% of the company stock. Additionally, the company’s CEO Antony Koblish directly holds 0.8% of the total shares outstanding.
After doing some more digging, we found that the top 11 have the combined ownership of 50% 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.
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.
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.
Shareholders would probably be interested to learn that insiders own shares in TELA Bio, Inc.. It has a market capitalization of just US$111m, and insiders have US$8.5m worth of shares, in their own names. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.
The general public, who are usually individual investors, hold a 41% stake in TELA Bio. 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.
With an ownership of 17%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
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 TELA Bio you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport 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.
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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.
