Stock Analysis

Individual investors who hold 53% of Vulcan Energy Resources Limited (ASX:VUL) gained 8.1%, insiders profited as well

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Key Insights

  • Significant control over Vulcan Energy Resources by general public implies that this group likely has considerable sway over management and governance-related decisions
  • The top 25 shareholders own 46% of the company
  • Insiders own 22% of Vulcan Energy Resources

If you want to know who really controls Vulcan Energy Resources Limited (ASX:VUL), then you'll have to look at the makeup of its share registry. With 53% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s AU$79m market cap gain, insiders too had a 22% share in those profits.

Let's delve deeper into each type of owner of Vulcan Energy Resources, beginning with the chart below.

View our latest analysis for Vulcan Energy Resources

ASX:VUL Ownership Breakdown January 28th 2023

What Does The Institutional Ownership Tell Us About Vulcan Energy Resources?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Vulcan Energy Resources does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Vulcan Energy Resources' historic earnings and revenue below, but keep in mind there's always more to the story.

ASX:VUL Earnings and Revenue Growth January 28th 2023

We note that hedge funds don't have a meaningful investment in Vulcan Energy Resources. The company's CEO Francis Edward Wedin is the largest shareholder with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.0% and 5.3% of the stock. Interestingly, the third-largest shareholder, Gavin Rezos is also a Chairman of the Board, again, indicating strong insider ownership amongst the company's top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Vulcan Energy 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.

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.

It seems insiders own a significant proportion of Vulcan Energy Resources Limited. Insiders own AU$229m worth of shares in the AU$1.1b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 53% stake in Vulcan Energy Resources, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 8.4%, of the Vulcan Energy Resources stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

We can see that public companies hold 8.0% of the Vulcan Energy 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 Vulcan Energy Resources better, we need to consider many other factors. For example, we've discovered 3 warning signs for Vulcan Energy Resources (1 shouldn't be ignored!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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