If you want to know who really controls Rhythm Biosciences Limited (ASX:RHY), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Rhythm Biosciences is not a large company by global standards. It has a market capitalization of AU$317m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions don't own many shares in the company. We can zoom in on the different ownership groups, to learn more about Rhythm Biosciences.

View our latest analysis for Rhythm Biosciences  ownership-breakdown

What Does The Lack Of Institutional Ownership Tell Us About Rhythm Biosciences?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Rhythm Biosciences might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely. earnings-and-revenue-growth

We note that hedge funds don't have a meaningful investment in Rhythm Biosciences. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Rhythm Biosciences' case, its Top Key Executive, Otto Buttula, is the largest shareholder, holding 13% of shares outstanding. The second and third largest shareholders are Michelle Wing and Adrien Wing, with an equal amount of shares to their name at 9.0%. In addition, we found that Glenn Gilbert, the CEO has 0.6% of the shares allocated to their name.



A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Rhythm Biosciences

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in Rhythm Biosciences Limited. It has a market capitalization of just AU$317m, and insiders have AU$136m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can  click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 44% stake in Rhythm Biosciences. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 11%, of the Rhythm Biosciences stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

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. Take risks for example - Rhythm Biosciences has  3 warning signs  (and 1 which is a bit unpleasant)  we think you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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