Is Dateline Resources Limited's (ASX:DTR) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
May 24, 2021
ASX:DTR
Source: Shutterstock

The big shareholder groups in Dateline Resources Limited (ASX:DTR) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Dateline Resources is a smaller company with a market capitalization of AU$662m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have not yet purchased much of the company. Let's take a closer look to see what the different types of shareholders can tell us about Dateline Resources.

View our latest analysis for Dateline Resources

ownership-breakdown
ASX:DTR Ownership Breakdown May 24th 2021

What Does The Institutional Ownership Tell Us About Dateline Resources?

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.

Less than 5% of Dateline Resources is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

earnings-and-revenue-growth
ASX:DTR Earnings and Revenue Growth May 24th 2021

Hedge funds don't have many shares in Dateline Resources. Southern Cross Exploration NL is currently the company's largest shareholder with 27% of shares outstanding. Mark Roderick Johnson is the second largest shareholder owning 19% of common stock, and Mutual Trust Pty Ltd, Asset Management Arm holds about 3.0% of the company stock. Additionally, the company's CEO Stephen Baghdadi directly holds 2.1% of the total shares outstanding.

On looking further, we found that 51% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Dateline Resources

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Dateline Resources Limited. Insiders own AU$192m worth of shares in the AU$662m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, with a 35% stake in the company, will not easily be ignored. 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 5.3%, of the Dateline Resources 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.

Public Company Ownership

We can see that public companies hold 27% of the Dateline Resources shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Dateline Resources better, we need to consider many other factors. Take risks for example - Dateline Resources has 5 warning signs (and 3 which make us uncomfortable) we think you should know about.

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.

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