Every investor in Great Western Exploration Limited (ASX:GTE) should be aware of the most powerful shareholder groups. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. 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.
With a market capitalization of AU$2.5m, Great Western Exploration is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions are not on the share registry. Let’s delve deeper into each type of owner, to discover more about Great Western Exploration.
What Does The Lack Of Institutional Ownership Tell Us About Great Western Exploration?
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. Great Western Exploration’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.
We note that hedge funds don’t have a meaningful investment in Great Western Exploration. From our data, we infer that the largest shareholder is Kevin Somes (who also holds the title of Top Key Executive) with 3.0% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we’re glad to see a company insider play the role of a key stakeholder. The second and third largest shareholders are Ian Kerr and Jordan Luckett, holding 3.0% and 2.9%, respectively. Interestingly, Jordan Luckett is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company’s top shareholders.
On studying our ownership data, we found that 19 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 Great Western Exploration
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. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
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 a reasonable proportion of Great Western Exploration Limited. Insiders have a AU$524k stake in this AU$2.5m business. 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 — own 67% of Great Western Exploration. 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.
Private Company Ownership
Our data indicates that Private Companies hold 10%, of the company’s shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
It’s always worth thinking about the different groups who own shares in a company. But to understand Great Western Exploration better, we need to consider many other factors. For instance, we’ve identified 6 warning signs for Great Western Exploration (3 are potentially serious) that you should be aware of.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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 firstname.lastname@example.org. 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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