Positive week for Piedmont Lithium Inc. (ASX:PLL) institutional investors who lost 11% over the past year

Key Insights

• Significantly high institutional ownership implies Piedmont Lithium's stock price is sensitive to their trading actions
• The top 25 shareholders own 47% of the company
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of Piedmont Lithium Inc. (ASX:PLL) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 46% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's AU$249m market cap gain would probably be appreciated by institutional investors, especially after a year of 11% losses.

Let's take a closer look to see what the different types of shareholders can tell us about Piedmont Lithium.

Check out our latest analysis for Piedmont Lithium

What Does The Institutional Ownership Tell Us About Piedmont Lithium?

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 Piedmont Lithium. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Piedmont Lithium's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Piedmont Lithium. State Street Global Advisors, Inc. is currently the largest shareholder, with 7.5% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 6.7% of common stock, and LG Chem, Ltd. holds about 5.7% of the company stock. Furthermore, CEO Keith Phillips is the owner of 0.7% of the company's shares.

On studying our ownership data, we found that 25 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Piedmont Lithium

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. 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.

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.

Our most recent data indicates that insiders own some shares in Piedmont Lithium Inc.. This is a big company, so it is good to see this level of alignment. Insiders own AU$64m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Piedmont Lithium. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

We can see that public companies hold 5.7% of the Piedmont Lithium shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Piedmont Lithium better, we need to consider many other factors. Take risks for example - Piedmont Lithium has 2 warning signs (and 1 which is significant) we think you should know about.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.