<!-- HTML_TAG_START -->NasdaqGS:LXRX Ownership Breakdown December 30th 2024<!-- HTML_TAG_END -->
Lexicon Pharmaceuticals’ significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
61% of the business is held by the top 2 shareholders
To get a sense of who is truly in control of Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion’s share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutions, on the other hand, account for 33% of the company’s stockholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.
In the chart below, we zoom in on the different ownership groups of Lexicon Pharmaceuticals.
NasdaqGS:LXRX Ownership Breakdown December 30th 2024
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.
As you can see, institutional investors have a fair amount of stake in Lexicon Pharmaceuticals. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Lexicon Pharmaceuticals’ historic earnings and revenue below, but keep in mind there’s always more to the story.
NasdaqGS:LXRX Earnings and Revenue Growth December 30th 2024
Lexicon Pharmaceuticals is not owned by hedge funds. Our data shows that Artal Group S.A. is the largest shareholder with 47% of shares outstanding. For context, the second largest shareholder holds about 14% of the shares outstanding, followed by an ownership of 3.0% by the third-largest shareholder.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
We can report that insiders do own shares in Lexicon Pharmaceuticals, Inc.. As individuals, the insiders collectively own US$3.2m worth of the US$280m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
The general public– including retail investors — own 18% stake in the company, and hence can’t easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
With an ownership of 47%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. 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.
It’s always worth thinking about the different groups who own shares in a company. But to understand Lexicon Pharmaceuticals better, we need to consider many other factors. For example, we’ve discovered 4 warning signs for Lexicon Pharmaceuticals (1 is significant!) that you should be aware of before investing here.
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.
