With 59% ownership in Perseus Mining Limited (ASX:PRU), institutional investors have a lot riding on the business

Key Insights

• Given the large stake in the stock by institutions, Perseus Mining's stock price might be vulnerable to their trading decisions
• The top 19 shareholders own 50% of the company
• Insiders have been buying lately

If you want to know who really controls Perseus Mining Limited (ASX:PRU), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 59% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 3.5% last week. One-year return to shareholders is currently 58% and last week’s gain was the icing on the cake.

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

See our latest analysis for Perseus Mining

What Does The Institutional Ownership Tell Us About Perseus Mining?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Perseus Mining. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Perseus Mining, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Perseus Mining. Van Eck Associates Corporation is currently the company's largest shareholder with 8.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.3% and 5.0%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 19 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Perseus Mining

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.

Our most recent data indicates that insiders own less than 1% of Perseus Mining Limited. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own AU$24m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Perseus Mining better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Perseus Mining .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.