Key Insights

• Significant control over NewAmsterdam Pharma by private equity firms implies that the general public has more power to influence management and governance-related decisions

• 56% of the business is held by the top 5 shareholders

• Recent purchases by insiders

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

Meanwhile, institutions make up 29% of the company’s shareholders. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time.

Let's delve deeper into each type of owner of NewAmsterdam Pharma, beginning with the chart below.

See our latest analysis for 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 can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 NewAmsterdam Pharma, (below). Of course, keep in mind that there are other factors to consider, too.

Our data indicates that hedge funds own 8.9% of NewAmsterdam Pharma. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Frazier Life Sciences Management, LP is currently the largest shareholder, with 14% of shares outstanding. With 13% and 12% of the shares outstanding respectively, Forbion Capital Partners B.V. and Bain Capital Life Sciences Investors, LLC are the second and third largest shareholders. Additionally, the company's CEO Michael Davidson directly holds 0.9% of the total shares outstanding.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of NewAmsterdam Pharma

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 NewAmsterdam Pharma Company N.V.. This is a big company, so it is good to see this level of alignment. Insiders own US$18m worth of shares (at current prices). 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

The general public-- including retail investors -- own 11% 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.

Private Equity Ownership

Private equity firms hold a 47% stake in NewAmsterdam Pharma. This suggests they can be influential in key policy decisions. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with NewAmsterdam Pharma .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report 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.