Key Insights

• Pulse Biosciences' significant insider ownership suggests inherent interests in company's expansion
• 69% of the company is held by a single shareholder (Robert Duggan)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in Pulse Biosciences, Inc. (NASDAQ:PLSE) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 71% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, insiders as a group endured the highest losses after market cap fell by US$154m.

In the chart below, we zoom in on the different ownership groups of Pulse Biosciences.

See our latest analysis for Pulse Biosciences

What Does The Institutional Ownership Tell Us About Pulse Biosciences?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Pulse Biosciences already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Pulse Biosciences, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Pulse Biosciences. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Pulse Biosciences' case, its Top Key Executive, Robert Duggan, is the largest shareholder, holding 69% of shares outstanding. In comparison, the second and third largest shareholders hold about 2.2% and 1.6% of the stock.

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 Pulse Biosciences

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our information suggests that insiders own more than half of Pulse Biosciences, Inc.. This gives them effective control of the company. Insiders own US$729m worth of shares in the US$1.0b company. That's extraordinary! Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 19% 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Pulse Biosciences better, we need to consider many other factors. For instance, we've identified 3 warning signs for Pulse Biosciences (1 is significant) 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.

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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.