Stock Analysis

Institutional investors have a lot riding on Capricorn Metals Ltd (ASX:CMM) with 47% ownership

ASX:CMM
Source: Shutterstock

Key Insights

  • Given the large stake in the stock by institutions, Capricorn Metals' stock price might be vulnerable to their trading decisions
  • The top 16 shareholders own 51% of the company
  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Capricorn Metals Ltd (ASX:CMM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 47% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit AU$3.1b in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 67%.

In the chart below, we zoom in on the different ownership groups of Capricorn Metals.

See our latest analysis for Capricorn Metals

ownership-breakdown
ASX:CMM Ownership Breakdown January 25th 2025

What Does The Institutional Ownership Tell Us About Capricorn Metals?

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.

As you can see, institutional investors have a fair amount of stake in Capricorn Metals. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Capricorn Metals' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:CMM Earnings and Revenue Growth January 25th 2025

Capricorn Metals is not owned by hedge funds. The company's largest shareholder is Van Eck Associates Corporation, with ownership of 8.4%. For context, the second largest shareholder holds about 6.1% of the shares outstanding, followed by an ownership of 5.2% by the third-largest shareholder. In addition, we found that Kim Massey, the CEO has 0.5% of the shares allocated to their name.

A closer look at our ownership figures suggests that the top 16 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Capricorn Metals

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can report that insiders do own shares in Capricorn Metals Ltd. The insiders have a meaningful stake worth AU$264m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 41% stake in Capricorn Metals. 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 3.6%, of the Capricorn Metals stock. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.