Stock Analysis

Winsome Resources Limited's (ASX:WR1) 32% gain last week benefited both retail investors who own 57% as well as insiders

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ASX:WR1
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Key Insights

  • The considerable ownership by retail investors in Winsome 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 43% ownership
  • 17% of Winsome Resources is held by insiders

A look at the shareholders of Winsome Resources Limited (ASX:WR1) can tell us which group is most powerful. The group holding the most number of shares in the company, around 57% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 32% increase in the stock price last week, retail investors profited the most, but insiders who own 17% stock also stood to gain from the increase.

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

Check out our latest analysis for Winsome Resources

ownership-breakdown
ASX:WR1 Ownership Breakdown April 1st 2023

What Does The Institutional Ownership Tell Us About Winsome Resources?

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.

Less than 5% of Winsome Resources is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

earnings-and-revenue-growth
ASX:WR1 Earnings and Revenue Growth April 1st 2023

Our data indicates that hedge funds own 14% of Winsome Resources. 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. Looking at our data, we can see that the largest shareholder is Waratah Capital Advisors Ltd. with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.0% and 2.9%, of the shares outstanding, respectively. Furthermore, CEO Christopher Evans is the owner of 0.9% 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 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Winsome Resources

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. 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 Winsome Resources Limited. Insiders own AU$52m worth of shares in the AU$301m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 57% of Winsome Resources shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 7.2%, of the shares on issue. 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 3.9% of Winsome Resources stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Winsome Resources you should be aware of, and 2 of them are a bit unpleasant.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

Valuation is complex, but we're helping make it simple.

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