Stock Analysis

With 71% ownership in Cameco Corporation (TSE:CCO), institutional investors have a lot riding on the business

TSX:CCO
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Key Insights

  • Significantly high institutional ownership implies Cameco's stock price is sensitive to their trading actions
  • 44% of the business is held by the top 25 shareholders
  • Recent sales by insiders

A look at the shareholders of Cameco Corporation (TSE:CCO) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 71% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And things are looking up for institutional investors after the company gained CA$2.3b in market cap last week. The one-year return on investment is currently 99% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Cameco.

Check out our latest analysis for Cameco

ownership-breakdown
TSX:CCO Ownership Breakdown May 21st 2024

What Does The Institutional Ownership Tell Us About Cameco?

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.

As you can see, institutional investors have a fair amount of stake in Cameco. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Cameco's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TSX:CCO Earnings and Revenue Growth May 21st 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Cameco is not owned by hedge funds. Our data shows that FMR LLC is the largest shareholder with 9.3% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.7% and 3.2% of the stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Cameco

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 most recent data indicates that insiders own less than 1% of Cameco Corporation. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CA$73m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cameco. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Cameco better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Cameco , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

Find out whether Cameco is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.