Could The Palamina Corp. (CVE:PA) Ownership Structure Tell Us Something Useful?

A look at the shareholders of Palamina Corp. (CVE:PA) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. 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.

Palamina is not a large company by global standards. It has a market capitalization of CA$8.7m, which means it wouldn’t have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don’t own many shares in the company. We can zoom in on the different ownership groups, to learn more about Palamina.

See our latest analysis for Palamina

TSXV:PA Ownership Summary, February 19th 2020
TSXV:PA Ownership Summary, February 19th 2020

What Does The Institutional Ownership Tell Us About Palamina?

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.

Institutions own less than 5% of Palamina. That indicates that the company is on the radar of some funds, but it isn’t particularly popular with professional investors at the moment. 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.

TSXV:PA Income Statement, February 19th 2020
TSXV:PA Income Statement, February 19th 2020

Palamina is not owned by hedge funds. With a 8.6% stake, CEO Andrew Thomson is the largest shareholder. With 2.4% and 1.2% of the shares outstanding respectively, Hugh Agro and Darin Wagner are the second and third largest shareholders. Interestingly, Darin Wagner is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company’s top shareholders.

A deeper look at our ownership data shows that the top 6 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

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. 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 Palamina

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems insiders own a significant proportion of Palamina Corp.. Insiders own CA$1.1m worth of shares in the CA$8.7m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, mostly retail investors, hold a substantial 86% stake in PA, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we’ve identified 5 warning signs for Palamina (3 are potentially serious) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.