Retail investors invested in WA1 Resources Ltd (ASX:WA1) up 16% last week, insiders too were rewarded

Key Insights

• WA1 Resources' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 13 shareholders own 51% of the company
• Insider ownership in WA1 Resources is 17%

A look at the shareholders of WA1 Resources Ltd (ASX:WA1) can tell us which group is most powerful. The group holding the most number of shares in the company, around 45% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that benefitted the most from last week’s AU$144m market cap gain, insiders too had a 17% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about WA1 Resources.

View our latest analysis for WA1 Resources

What Does The Institutional Ownership Tell Us About WA1 Resources?

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 WA1 Resources. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 WA1 Resources' historic earnings and revenue below, but keep in mind there's always more to the story.

It looks like hedge funds own 11% of WA1 Resources shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Our data shows that Agrimin Limited is the largest shareholder with 13% of shares outstanding. With 11% and 5.4% of the shares outstanding respectively, Regal Partners Limited and Paul Savich are the second and third largest shareholders. Paul Savich, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 13 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over 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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of WA1 Resources

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in WA1 Resources Ltd. It has a market capitalization of just AU$1.0b, and insiders have AU$174m worth of shares in their own names. 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 45% stake in WA1 Resources. 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.

Private Company Ownership

It seems that Private Companies own 3.3%, of the WA1 Resources stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 13% of the WA1 Resources shares on issue. 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. For instance, we've identified 5 warning signs for WA1 Resources (2 make us uncomfortable) that you should be aware of.

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.