Henry, the last institutional investor (II) data I saw was some time ago but, even then, they owned almost 60% of US stocks. This means even AMGN is "under-owned" by US II's and LGND, at 34%, is grossly under-owned.
Being generally familiar with the way most II's invest, I think the reason few invest in a LGNDat this stage is they just can't easily evaluate a biotech using the standard financial models which discount expected future cash flows. There are more uncertainties than those found in mature companies. Rather than try to understand developing companies, inertia prevails and the IIs focus on selecting among companies which have the data necessary to fit in their standard evaluation models. Once a company gets closer to meeting the usual data requirements, IIs begin to take notice with the more risk tolerant starting to buy. As cash flow forecasts grow, lose their venture type risk aspects, and move toward maturity, even more IIs join the party until II ownership in "normal" in size.
LGND is at a very early stage in terms on II ownership. By the time it is in the normal range of ownership, LGND's price will by much, much higher.
Regards,
Walter |
