RGC

With 81% ownership, Regencell Bioscience Holdings Limited (NASDAQ:RGC) insiders have a lot at stake

To get a sense of who is truly in control of Regencell Bioscience Holdings Limited (NASDAQ:RGC), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 81% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

So it follows, every decision made by insiders of Regencell Bioscience Holdings regarding the company's future would be crucial to them.

In the chart below, we zoom in on the different ownership groups of Regencell Bioscience Holdings.

ownership-breakdown
NasdaqCM:RGC Ownership Breakdown October 26th 2022

What Does The Lack Of Institutional Ownership Tell Us About Regencell Bioscience Holdings?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

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. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Regencell Bioscience Holdings, for yourself, below.

earnings-and-revenue-growth
NasdaqCM:RGC Earnings and Revenue Growth October 26th 2022

Regencell Bioscience Holdings is not owned by hedge funds. With a 81% stake, CEO Yat-Gai Au is the largest shareholder. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. For context, the second largest shareholder holds about 7.6% of the shares outstanding, followed by an ownership of 0.05% by the third-largest shareholder.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Regencell Bioscience Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the Regencell Bioscience Holdings Limited stock. This gives them a lot of power. Given it has a market cap of US$358m, that means they have US$291m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

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 7.6% stake in Regencell Bioscience Holdings. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it 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. For instance, we've identified 1 warning sign for Regencell Bioscience Holdings that you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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