Hikma Pharmaceuticals PLC (LON:HIK) is a favorite amongst institutional investors who own 54%

Simply Wall St · 01/07 11:46

Key Insights

  • Given the large stake in the stock by institutions, Hikma Pharmaceuticals' stock price might be vulnerable to their trading decisions
  • A total of 12 investors have a majority stake in the company with 51% ownership
  • Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in Hikma Pharmaceuticals PLC (LON:HIK) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's delve deeper into each type of owner of Hikma Pharmaceuticals, beginning with the chart below.

View our latest analysis for Hikma Pharmaceuticals

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LSE:HIK Ownership Breakdown January 7th 2025

What Does The Institutional Ownership Tell Us About Hikma Pharmaceuticals?

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.

Hikma Pharmaceuticals already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hikma Pharmaceuticals' historic earnings and revenue below, but keep in mind there's always more to the story.

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LSE:HIK Earnings and Revenue Growth January 7th 2025

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hikma Pharmaceuticals is not owned by hedge funds. Our data shows that Darhold Ltd. is the largest shareholder with 27% of shares outstanding. For context, the second largest shareholder holds about 6.4% of the shares outstanding, followed by an ownership of 3.5% by the third-largest shareholder.

After doing some more digging, we found that the top 12 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Hikma Pharmaceuticals

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.

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 see that insiders own shares in Hikma Pharmaceuticals PLC. This is a big company, so it is good to see this level of alignment. Insiders own UK£100m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hikma Pharmaceuticals. 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 Company Ownership

Our data indicates that Private Companies hold 27%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hikma Pharmaceuticals better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Hikma Pharmaceuticals .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.