Can We See Significant Insider Ownership On The GobiMin Inc. (CVE:GMN) Share Register?

The big shareholder groups in GobiMin Inc. (CVE:GMN) have power over the company. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.

GobiMin is not a large company by global standards. It has a market capitalization of CA$9.9m, which means it wouldn’t have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have not yet purchased shares. Let’s delve deeper into each type of owner, to discover more about GobiMin.

Check out our latest analysis for GobiMin

TSXV:GMN Ownership Summary May 2nd 2020
TSXV:GMN Ownership Summary May 2nd 2020

What Does The Lack Of Institutional Ownership Tell Us About GobiMin?

We don’t tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. GobiMin might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

TSXV:GMN Income Statement May 2nd 2020
TSXV:GMN Income Statement May 2nd 2020

Hedge funds don’t have many shares in GobiMin. Our data shows that Belmont Holdings Group Limited is the largest shareholder with 63% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. The second and third largest shareholders are Jinchuan Group Co., Ltd. and Felipe Tan, holding 17% and 7.6%, respectively. Felipe Tan also happens to hold the title of Chairman of the Board.

Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of GobiMin

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own some shares in GobiMin Inc.. It has a market capitalization of just CA$9.9m, and insiders have CA$776k worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 12% stake in GMN. 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

Our data indicates that Private Companies hold 80%, of the company’s shares. 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. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for GobiMin (of which 2 make us uncomfortable!) you should know about.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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