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Both retail investors who control a good portion of Tourmaline Oil Corp. (TSE:TOU) along with institutions must be dismayed after last week's 3.5% decrease
Key Insights
- Tourmaline Oil's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
- A total of 25 investors have a majority stake in the company with 42% ownership
- Insiders have sold recently
To get a sense of who is truly in control of Tourmaline Oil Corp. (TSE:TOU), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While institutions, who own 44% shares weren’t spared from last week’s CA$890m market cap drop, retail investors as a group suffered the maximum losses
In the chart below, we zoom in on the different ownership groups of Tourmaline Oil.
See our latest analysis for Tourmaline Oil
What Does The Institutional Ownership Tell Us About Tourmaline Oil?
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.
Tourmaline Oil already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Tourmaline Oil, (below). Of course, keep in mind that there are other factors to consider, too.
We note that hedge funds don't have a meaningful investment in Tourmaline Oil. Capital Research and Management Company is currently the company's largest shareholder with 11% of shares outstanding. For context, the second largest shareholder holds about 4.0% of the shares outstanding, followed by an ownership of 3.7% by the third-largest shareholder. Michael Rose, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Tourmaline Oil
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
We can see that insiders own shares in Tourmaline Oil Corp.. It is a very large company, and board members collectively own CA$1.2b worth of shares (at current prices). It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public -- including retail investors -- own 51% of Tourmaline Oil. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Tourmaline Oil better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Tourmaline Oil , 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 here to simplify it.
Discover if Tourmaline Oil might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
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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.
About TSX:TOU
Tourmaline Oil
Engages in the acquisition, exploration, development, and production of petroleum and natural gas properties in the Western Canadian Sedimentary Basin.
High growth potential with adequate balance sheet.
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