Vulcan Energy Resources Limited's (ASX:VUL) last week's 13% decline must have disappointed retail investors who have a significant stake

Key Insights

• The considerable ownership by retail investors in Vulcan Energy Resources indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 49% ownership
• Insider ownership in Vulcan Energy Resources is 20%

A look at the shareholders of Vulcan Energy Resources Limited (ASX:VUL) can tell us which group is most powerful. With 51% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders who own 20% came under pressure after market cap dropped to AU$1.1b last week,retail investors took the most losses.

In the chart below, we zoom in on the different ownership groups of Vulcan Energy Resources.

View our latest analysis for Vulcan Energy Resources

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.

Vulcan Energy Resources already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Vulcan Energy Resources' historic earnings and revenue below, but keep in mind there's always more to the story.

Vulcan Energy Resources is not owned by hedge funds. From our data, we infer that the largest shareholder is Francis Edward Wedin (who also holds the title of Top Key Executive) with 7.2% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. For context, the second largest shareholder holds about 6.5% of the shares outstanding, followed by an ownership of 5.5% by the third-largest shareholder.

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.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

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. 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 a reasonable proportion of Vulcan Energy Resources Limited. It has a market capitalization of just AU$1.1b, and insiders have AU$229m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 51% stake in Vulcan Energy Resources, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 7.7%, of the Vulcan Energy 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

Public companies currently own 11% of Vulcan Energy Resources stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 2 warning signs we've spotted with Vulcan Energy Resources .

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.