Activist company

Hedge fund investors control 46% of La Jolla Pharmaceutical Company (NASDAQ:LJPC) and were rewarded last week after the stock rose 16%

To get a sense of who really controls La Jolla Pharmaceutical Company (NASDAQ:LJPC), it’s important to understand the company’s ownership structure. The group with the largest number of shares in the company, around 46% to be precise, are hedge funds. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).

And last week, hedge fund investors ended up benefiting the most after the company hit $108 million in market capitalization. The one-year ROI is currently 15% and last week’s gain would have been more than welcome.

In the table below, we zoom in on the different ownership groups of La Jolla Pharmaceutical.

Check out our latest analysis for La Jolla Pharmaceutical

NasdaqCM: LJPC Ownership Breakdown May 18, 2022

What does institutional ownership tell us about La Jolla Pharmaceutical?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

As you can see, institutional investors own a sizeable share of La Jolla Pharmaceutical. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out La Jolla Pharmaceutical’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqCM: LJPC Earnings and Revenue Growth May 18, 2022

Our data shows that hedge funds own 46% of La Jolla Pharmaceutical. This is interesting because hedge funds can be very active and militant. Many are looking for medium-term catalysts that will drive the stock price higher. Our data shows that Tang Capital Management, LLC is the largest shareholder with 37% of shares outstanding. With 9.0% and 3.2% of the shares outstanding, respectively, RTW Investments, LP and The Vanguard Group, Inc. are the second and third largest shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company, which implies that this group has considerable influence on the decision-making of the company.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the sentiments of analysts. There is a little analyst coverage of the stock, but not much. So there is room for him to gain coverage.

Insider ownership of La Jolla Pharmaceutical

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders hold less than 1% of La Jolla Pharmaceutical Company in their own name. It appears that the board holds approximately US$507,000 in stock. This compares to a market capitalization of US$108 million. We generally like to see a more invested board. However, it may be useful to check whether these insiders have bought.

General public property

With a 32% stake, the general public, consisting mostly of individual investors, has some influence over La Jolla Pharmaceutical. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. Take risks for example – La Jolla Pharmaceutical has 3 warning signs (and 2 that are potentially serious) that we think you should know about.

But finally it’s the future, not the past, which will determine the performance of the owners of this company. Therefore, we think it’s advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.