February 19, 2025

How Do Public Biotechs Know Who Owns Them? (And What Are 13F, 13D and 13G Reports, and Transfer Agents/Registrars?)

It may sound odd, but the last time a biotech knows exactly who owns them is in the brief seconds before their first trade as a public company.

At that moment – were they not quivering with anticipation at imminently going public – a CEO or CFO could look at the cap table they (or their lawyers) maintained prior to the IPO (often in the form of an Excel spreadsheet), add in the allocations given to their IPO participants, and know precisely who owns what.

After that it’s a lot of rearview mirror guesswork, for reasons I will explain.

When a company goes public, its pre-IPO shareholders typically transfer their stakes to their brokerage accounts (note: such brokerage accounts can’t hold shares in private companies but can hold public company stocks). Essentially, this is when the obfuscation starts.

From here on in, most brokerages declare their combined holdings and omit the ultimate beneficiaries of the shares they declare as holding.

The same is true for those the company sold shares to at the IPO. Upon pricing, those shares immediately go to the buyers, where they are again typically held via an intermediary.

How then do biotechs monitor their shareholder base? The answer comes in the form of SEC filings, which qualifying shareholders are required to make.

What are 13F filings/reports?

13F filings are quarterly reports required by the SEC that disclose the holdings of institutions having at least $100 million in assets under management.

13F filings include the name, class, and number of each type of share held as well as their fair market value at the end of each calendar quarter. These filings are accessible through the SEC’s online EDGAR system.

These filings are required within 45 days (not business days) after the end of each quarter – so holdings on March 31 (1Q) are known on/by May 15 and so on.

Because of the predictability of this reporting, biotechs are often inundated with 13F analyses from their IPO bankers, IR partners and/or NASDAQ surveillance (if they are a subscriber).

From these reports you can see which major shareholders have bought or sold your shares over the period, and who your major shareholders are (albeit only as of the last date of the quarter just closed).

What are 13G filings/reports?

Another way you get to know who owns your stock is via 13G filings, which are required by the SEC when any individual entity (or coordinated grouping) gains beneficial passive ownership of more than 5% of a listed company’s stock.

Such a filing must be made within 10 days (again, not business days) of crossing the 5% threshold. These filings are also accessible via the SEC’s EDGAR system.

All of your friendly, healthcare-specialist public funds will file 13G reports (in addition to quarterly 13F reports) if they own more than 5% of your stock.

What are 13D filings/reports?

Schedule 13D filings are also made within 10 days of acquiring more than 5% of a company’s stock but are filed by investors when they intend on changing control of the company.

Activist investors file 13D reports and sometimes the 13D filing can be the first time management and the board become aware of a potential hostile investor.

Why can’t I get a list of shareholders from my transfer agent/registrar?

Let’s start with the definition of a transfer agent/registrar.

A transfer agent/registrar (these days they are nearly always combined) is an institution appointed (and paid) by a publicly traded company to maintain an accurate record of its shareholders and their holdings. These entities also administer tasks related to share ownership such as dividend payments (where relevant) and shareholder communications.

The three biggest transfer agents/registrars in the U.S. are Computershare, American Stock Transfer & Trust Company (AST) and Broadridge.

I think of them as operating giant servers, through which they maintain all share records and account for all trading, so that they always maintain a complete account of the company’s shareholder base.

Unfortunately, the transfer agent/registrar is unable to penetrate the obfuscation of ownership when shares are held through brokerage accounts.

On average, only 1% (or thereabouts) of shareholders register their shares directly with the transfer agent/registrar. Their identities are known.

The other 99% (or thereabouts) is recorded as belonging to the Depository Trust Company (DTC), whose members include all the top U.S brokers such as Charles Schwab, Vanguard, Fidelity Investments, J.P. Morgan Chase & Co., Morgan Stanley etc.

Information and money (with the exception of some materials such as proxy voting) flows through DTC and its member brokers. Dividends will make their way through to your stock’s ultimate owners. Shareholder notifications do as well. But the ultimate underlying ownership of stocks held in brokerage accounts does not flow back up.

As such, if you requested a list of your shareholders from your registrar, it would contain about 1% of the shareholder base and likely will not have all of your big holders.

And for the sake of clarity, Broadridge (which typically partners with companies for such things as their annual proxy) is not at liberty to disclose beneficial ownership data unless the shareholder has specifically granted written permission (these are referred to as NOBOs or non-objecting beneficial owners). Otherwise, the default is non-disclosure, since shareholder identity and ownership resides solely with the brokerage where the account is maintained.

In conclusion

To wrap up then, while 13F reports aren’t complete (they don’t include funds with assets under management of less than $100 million) or current (they are always at least 45 days out of date), they nonetheless remain the best way for biotechs to track the ownership of their stock.