Novonix Limited's (ASX:NVX) market cap surged AU$58m last week, retail investors who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by retail investors in Novonix indicates that they collectively have a greater say in management and business strategy
• 43% of the business is held by the top 25 shareholders
• Insiders have been selling lately

A look at the shareholders of Novonix Limited (ASX:NVX) can tell us which group is most powerful. The group holding the most number of shares in the company, around 56% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, retail investors benefitted the most after the company's market cap rose by AU$58m last week.

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

Check out our latest analysis for Novonix

What Does The Institutional Ownership Tell Us About Novonix?

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 Novonix does have institutional investors; and they hold a good portion of the company's stock. 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 Novonix, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Novonix. Looking at our data, we can see that the largest shareholder is Phillips 66 with 16% of shares outstanding. For context, the second largest shareholder holds about 4.2% of the shares outstanding, followed by an ownership of 3.9% by the third-largest shareholder. In addition, we found that John Burns, the CEO has 0.7% of the shares allocated to their name.

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.

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. 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 Novonix

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

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Novonix Limited. It has a market capitalization of just AU$487m, and insiders have AU$60m 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 56% stake in Novonix, suggesting it is a fairly popular stock. 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.

Public Company Ownership

Public companies currently own 16% of Novonix 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Novonix better, we need to consider many other factors. For example, we've discovered 2 warning signs for Novonix that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.