Individual investors in Prospect Resources Limited (ASX:PSC) are its biggest bettors, and their bets paid off as stock gained 13% last week
Key Insights
- The considerable ownership by individual investors in Prospect Resources indicates that they collectively have a greater say in management and business strategy
- The top 11 shareholders own 50% of the company
- 12% of Prospect Resources is held by Institutions
A look at the shareholders of Prospect Resources Limited (ASX:PSC) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, individual investors collectively scored the highest last week as the company hit AU$151m market cap following a 13% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about Prospect Resources.
See our latest analysis for Prospect Resources
What Does The Institutional Ownership Tell Us About Prospect Resources?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Prospect Resources does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Prospect Resources' earnings history below. Of course, the future is what really matters.
Prospect Resources is not owned by hedge funds. Eagle Eye Asset Holdings Pte Ltd is currently the company's largest shareholder with 15% of shares outstanding. For context, the second largest shareholder holds about 15% of the shares outstanding, followed by an ownership of 4.5% by the third-largest shareholder. Additionally, the company's CEO Samuel Hosack directly holds 2.7% of the total shares outstanding.
A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Prospect Resources
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 Prospect Resources Limited. As individuals, the insiders collectively own AU$14m worth of the AU$151m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Prospect Resources. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
We can see that Private Companies own 33%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Prospect Resources you should be aware of, and 2 of them are potentially serious.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.