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Key Insights

• Significant control over PolyNovo by individual investors implies that the general public has more power to influence management and governance-related decisions

• A total of 25 investors have a majority stake in the company with 42% ownership

• Recent sales by insiders

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To get a sense of who is truly in control of PolyNovo Limited (ASX:PNV), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While institutions who own 31% came under pressure after market cap dropped to AU$725m last week,individual investors took the most losses.

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

Check out our latest analysis for PolyNovo

What Does The Institutional Ownership Tell Us About PolyNovo?

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

We can see that PolyNovo does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 PolyNovo's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in PolyNovo. Fidelity International Ltd is currently the company's largest shareholder with 8.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.0% and 4.8%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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.