Retail investors who are among the largest shareholders of ADC Therapeutics SA (NYSE:ADCT) were able to increase their stock value after the share price rose 14% last week.

Key findings

• The significant participation of retail investors in ADC Therapeutics suggests that key decisions are influenced by shareholders from the general public.
• The 11 largest shareholders own 50% of the company
• Insiders recently sold

If you want to know who really controls ADC Therapeutics SA (NYSE:ADCT), you need to look at the composition of its share registry. The group that holds the most shares in the company, around 41%, are retail investors. In other words, this group stands to gain (or lose) the most from their investment in the company.

As a result, small investors in particular benefited from the 14 percent price increase last week.

Let’s take a closer look at what the different types of shareholders can tell us about ADC Therapeutics.

Check out our latest analysis for ADC Therapeutics

What does institutional ownership tell us about ADC Therapeutics?

Many institutions measure their performance against an index that is similar to the local market, so they tend to pay more attention to companies listed in major indices.

ADC Therapeutics already has institutions on the share registry. In fact, they own a sizeable share of the company. This means that the analysts working for those institutions have looked at the stock and they like it. But like anyone else, they could be wrong. 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 out ADC Therapeutics’ past earnings trajectory (see below). Of course, keep in mind that there are other factors to consider as well.

It appears that 23% of ADC Therapeutics shares are controlled by hedge funds. This catches my attention because hedge funds sometimes try to influence management or bring about changes that create short-term value for shareholders. Redmile Group, LLC is currently the largest shareholder with 16% of the outstanding shares. For comparison, the second largest shareholder holds about 7.7% of the outstanding shares, followed by a 6.7% stake by the third largest shareholder. In addition, we found that CEO Ameet Mallik owns 1.2% of the shares.

A look at the shareholder register shows that 50% of the ownership is controlled by the 11 largest shareholders. This means that no single shareholder has a majority stake in the ownership.

While studying institutional ownership of a company can enrich your research, it is also a good practice to research analyst recommendations to get a deeper understanding of a stock’s expected performance. Quite a few analysts cover the stock, so you can examine the forecast growth quite easily.

Insider ownership of ADC Therapeutics

The definition of an insider may vary slightly in different countries, but members of the board of directors are always included. The company’s management is accountable to the board of directors, which should represent the interests of the shareholders. In particular, top managers are sometimes on the board of directors themselves.

Most people consider insider ownership to be a positive because it can indicate that the board is well aligned with other shareholders. However, sometimes too much power is concentrated in this group.

Our latest data shows that insiders own some shares in ADC Therapeutics SA. In their own names, insiders own US$14 million worth of shares in the US$294 million company. Some would say this shows an alignment of interests between shareholders and the board, but it might be worth checking to see if these insiders have been selling.

Public property

The general public – including retail investors – owns 41% of the company’s shares and therefore cannot be easily ignored. While this level of ownership is significant, it may not be enough to change company policy if the decision does not align with that of other major shareholders.

Private company ownership

According to our data, private companies hold 10% of the company’s shares. This might be worth investigating further. If related parties, such as insiders, have an interest in one of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Ownership of public companies

It appears to us that public companies own 4.2% of ADC Therapeutics. This could be a strategic interest and the two companies may have related business interests. It could be that they have split. This holding is probably worth investigating further.

Next Steps:

It is always worth thinking about the different groups that own shares in a company. But to better understand ADC Therapeutics, we need to consider many other factors. Note that ADC Therapeutics 5 warning signals in our investment analysis and one of them is causing some concern…

If you prefer to know what analysts are predicting regarding future growth, don’t miss this free Report on analyst forecasts.

NB: The figures in this article are calculated using the last twelve months’ data, which refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the annual report.

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This Simply Wall St article is of a general nature. We comment solely on historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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