Key Insights

• NewAmsterdam Pharma's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 5 shareholders own 56% of the company
• Insiders have bought recently

Every investor in NewAmsterdam Pharma Company N.V. (NASDAQ:NAMS) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 47% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 29% came under pressure after market cap dropped to US$1.5b last week,private equity firms took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about NewAmsterdam Pharma.

What Does The Institutional Ownership Tell Us About NewAmsterdam Pharma?

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.

NewAmsterdam Pharma already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 NewAmsterdam Pharma's historic earnings and revenue below, but keep in mind there's always more to the story.

Our data indicates that hedge funds own 8.9% of NewAmsterdam Pharma. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Frazier Life Sciences Management, LP is currently the largest shareholder, with 14% of shares outstanding. In comparison, the second and third largest shareholders hold about 13% and 12% of the stock. Additionally, the company's CEO Michael Davidson directly holds 0.9% of the total shares outstanding.

On looking further, we found that 56% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of 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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of NewAmsterdam Pharma

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.

Our most recent data indicates that insiders own some shares in NewAmsterdam Pharma Company N.V.. The insiders have a meaningful stake worth US$18m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NewAmsterdam Pharma. 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.

Private Equity Ownership

With a stake of 47%, private equity firms could influence the NewAmsterdam Pharma board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand NewAmsterdam Pharma better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for NewAmsterdam Pharma you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.