Should You Be Concerned About American CuMo Mining Corporation’s (CVE:MLY) Shareholders?

In this article, I’m going to take a look at American CuMo Mining Corporation’s (TSXV:MLY) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, it is beneficial for us to examine MLY’s ownership structure in more detail.

See our latest analysis for American CuMo Mining
TSXV:MLY Ownership_summary Mar 30th 18
TSXV:MLY Ownership_summary Mar 30th 18

Institutional Ownership

Institutional investors are one of the largest group of market participants and their buy-sell decisions on a company’s stock can significantly impact prices, more so, when there are relatively small amounts of shares available on the market to trade. With hardly any institutional ownership, MLY stock poses limited concern relating to the effect institutional block trades have on its stock price.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. With 5.21% ownership, MLY insiders is an important ownership type. This level of stake with insiders indicate highly aligned interests of shareholders and company executives. However, it would be interesting to take a look at their buying and selling activities lately. Buying may be sign of upbeat future expectations, but selling doesn’t necessarily mean the opposite as the insiders may be motivated by financial needs or they are simply diversifying their risk.
TSXV:MLY Insider_trading Mar 30th 18
TSXV:MLY Insider_trading Mar 30th 18

General Public Ownership

A substantial ownership of 94.35% in MLY is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.

Private Company Ownership

Potential investors in MLY should also look at another important group of investors: private companies, with a stake of 0.35%, who are primarily invested because of strategic and capital gain interests. However, an ownership of this size may be relatively insignificant, meaning that these shareholders may not have the potential to influence MLY’s business strategy. Thus, investors not need worry too much about the consequences of these holdings.

Next Steps:

Institutional ownership level and composition in MLY is not high nor active enough to significantly impact its investment thesis. However, ownership structure should not be the only focus of your research when constructing an investment thesis around MLY. Instead, you should be evaluating company-specific factors such as the intrinsic valuation, which is a key driver of American CuMo Mining’s share price. I highly recommend you to complete your research by taking a look at the following:

  • 1. Financial Health: Is MLY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  • 2. Past Track Record: Has MLY been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of MLY’s historicals for more clarity.
  • 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.