Do Insiders Own Lots Of Shares In Midpoint Holdings Ltd. (CVE:MPT)?

If you want to know who really controls Midpoint Holdings Ltd. (CVE:MPT), then you’ll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of 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.

Midpoint Holdings is a smaller company with a market capitalization of CA$5.7m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. Let’s take a closer look to see what the different types of shareholder can tell us about Midpoint Holdings.

See our latest analysis for Midpoint Holdings

TSXV:MPT Ownership Summary May 5th 2020
TSXV:MPT Ownership Summary May 5th 2020

What Does The Lack Of Institutional Ownership Tell Us About Midpoint Holdings?

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 multiple explanations for why institutions don’t own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Midpoint Holdings’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.

TSXV:MPT Income Statement May 5th 2020
TSXV:MPT Income Statement May 5th 2020

We note that hedge funds don’t have a meaningful investment in Midpoint Holdings. Looking at our data, we can see that the largest shareholder is the CEO Shee Wong with 8.8% of shares outstanding. The second and third largest shareholders are Corbin Comishin and Michael Hampson, holding 5.4% and 5.0%, respectively. Note that they are also Chief Financial Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

Our studies suggest that the top 9 shareholders collectively control less than 50% of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Midpoint Holdings

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Midpoint Holdings Ltd.. It has a market capitalization of just CA$5.7m, and insiders have CA$1.3m worth of shares in their own names. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly retail investors, hold a substantial 75% stake in MPT, suggesting it is a fairly popular stock. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

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. Be aware that Midpoint Holdings is showing 3 warning signs in our investment analysis , and 2 of those don’t sit too well with us…

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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