Is BCI Minerals Limited's (ASX:BCI) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
April 19, 2021
ASX:BCI
Source: Shutterstock

If you want to know who really controls BCI Minerals Limited (ASX:BCI), 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. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

BCI Minerals is a smaller company with a market capitalization of AU$183m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about BCI Minerals.

Check out our latest analysis for BCI Minerals

ownership-breakdown
ASX:BCI Ownership Breakdown April 19th 2021

What Does The Institutional Ownership Tell Us About BCI Minerals?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

BCI Minerals already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at BCI Minerals' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:BCI Earnings and Revenue Growth April 19th 2021

Hedge funds don't have many shares in BCI Minerals. Australian Capital Equity Pty Ltd. is currently the company's largest shareholder with 40% of shares outstanding. Ryder Investment Management Pty Limited is the second largest shareholder owning 4.2% of common stock, and Sandon Capital Pty Ltd. holds about 3.5% of the company stock. In addition, we found that Alwyn Vorster, the CEO has 0.9% of the shares allocated to their name.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of BCI Minerals

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.

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.

We can see that insiders own shares in BCI Minerals Limited. In their own names, insiders own AU$12m worth of stock in the AU$183m company. This shows at least some alignment, but I usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 41% ownership, the general public have some degree of sway over BCI Minerals. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 41%, of the BCI Minerals stock. 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:

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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for BCI Minerals (of which 1 is a bit concerning!) you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.
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