What Is The Ownership Structure Like For North American Construction Group Ltd. (TSE:NOA)?

By
Simply Wall St
Published
June 06, 2021
TSX:NOA

The big shareholder groups in North American Construction Group Ltd. (TSE:NOA) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

With a market capitalization of CA$476m, North American Construction Group is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about North American Construction Group.

See our latest analysis for North American Construction Group

ownership-breakdown
TSX:NOA Ownership Breakdown June 7th 2021

What Does The Institutional Ownership Tell Us About North American Construction Group?

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.

As you can see, institutional investors have a fair amount of stake in North American Construction Group. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 North American Construction Group, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:NOA Earnings and Revenue Growth June 7th 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 15% of North American Construction Group. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Mawer Investment Management Limited is currently the largest shareholder, with 16% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.0% and 8.5% of the stock. Furthermore, CEO Joseph Lambert is the owner of 0.8% of the company's shares.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of North American Construction Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 some shares in North American Construction Group Ltd.. In their own names, insiders own CA$47m worth of stock in the CA$476m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 17% stake in North American Construction Group. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand North American Construction Group better, we need to consider many other factors. For instance, we've identified 1 warning sign for North American Construction Group that you should be aware of.

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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