Why Planet Ventures Inc's (CVE:PXI) Ownership Structure Is Important

March 12, 2018

In this article, I will take a quick look at Planet Ventures Inc’s (TSXV:PXI) recent ownership structure – an unconventional investing subject, but an important one. The impact of a company's ownership structure affects both its short- and long-term performance. If an activist institution invests the same amount of capital in a stock as a passive long-term pension fund, the implications are potentially different for key corporate financing decisions such as the use of excess cash or the source of financing. While these are more of a long-term investor’s concern, short-term investors may find the impact of institutional trading overwhelming enough to lose out on what could be a potential opportunity. Therefore, I will take a look at PXI's shareholders in more detail.

See our latest analysis for Planet Ventures

General Public Ownership

A big stake of 98.32% in PXI is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.

Private Company Ownership

Another important group of owners for potential investors in PXI are private companies that hold a stake of 1.68% in PXI. These are companies that are mainly invested due to their strategic interests or are incentivized by reaping capital gains on investments their shareholdings. However, an ownership of this size may be relatively insignificant, meaning that these shareholders may not have the potential to influence PXI's business strategy. Thus, investors not need worry too much about the consequences of these holdings.

Next Steps:

A large shareholding of PXI by the general public could mean higher market liquidity to buy and sell shares for retail investors, and also the potential to have more influence over company policies as a collective. However, ownership structure should not be the only focus of your research when constructing an investment thesis around PXI. Rather, you should be examining fundamental factors such as Planet Ventures's past track record and financial health. I highly recommend you to complete your research by taking a look at the areas below. Just a heads up - to access some parts of the Simply Wall St research tool you might be asked to create a free account, but it takes just one click and the information they provide is definitely worth it in my opinion.

1. Financial Health: Is PXI’s operations financially sustainable? Balance sheets can be hard to analyze, which is why Simply Wall St does it for us. Check out important financial health checks here.
2. Past Track Record: Has PXI been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of PXI's historicals for more clarity.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore a free list of these great stocks here.

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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.