Could The AuStar Gold Limited (ASX:AUL) Ownership Structure Tell Us Something Useful?

If you want to know who really controls AuStar Gold Limited (ASX:AUL), then you’ll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes “a business with enduring competitive advantages that is run by able and owner-oriented people.” So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

AuStar Gold is not a large company by global standards. It has a market capitalization of AU$9.8m, 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 institutions don’t own many shares in the company. Let’s delve deeper into each type of owner, to discover more about AuStar Gold.

See our latest analysis for AuStar Gold

ASX:AUL Ownership Summary May 27th 2020
ASX:AUL Ownership Summary May 27th 2020

What Does The Institutional Ownership Tell Us About AuStar Gold?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Less than 5% of AuStar Gold is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

ASX:AUL Income Statement May 27th 2020
ASX:AUL Income Statement May 27th 2020

AuStar Gold is not owned by hedge funds. Our data shows that Paul McNally is the largest shareholder with 13% of shares outstanding. The second and third largest shareholders are McNally Clan Investments Pty Ltd and Peter Kampfner, holding 12% and 6.4%, respectively.

Further, we can found that 50% of the ownership is controlled by the top 11 shareholders, meaning that no one shareholder has a majority interest in the ownership.

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. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of AuStar Gold

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own a reasonable proportion of AuStar Gold Limited. Insiders own AU$3.0m worth of shares in the AU$9.8m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public holds a 40% stake in AUL. 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 28%, 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. For instance, we’ve identified 5 warning signs for AuStar Gold (3 shouldn’t be ignored) that you should be aware of.

If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.

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. 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. Thank you for reading.