individual investors who own 45% along with institutions invested in Argonaut Gold Inc. (TSE:AR) saw increase in their holdings value last week

By
Simply Wall St
Published
April 15, 2022
TSX:AR
Source: Shutterstock

A look at the shareholders of Argonaut Gold Inc. (TSE:AR) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 45% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that reaped the most benefits after last week’s 8.6% price gain, institutions also received a 32% cut.

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

See our latest analysis for Argonaut Gold

ownership-breakdown
TSX:AR Ownership Breakdown April 15th 2022

What Does The Institutional Ownership Tell Us About Argonaut Gold?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Argonaut Gold. 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 Argonaut Gold, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:AR Earnings and Revenue Growth April 15th 2022

It would appear that 20% of Argonaut Gold shares are controlled by hedge funds. 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. GMT Capital Corp. is currently the largest shareholder, with 20% of shares outstanding. With 8.6% and 3.2% of the shares outstanding respectively, Van Eck Associates Corporation and Donald Smith & Co., Inc. are the second and third largest shareholders.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 23 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Argonaut Gold

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 Argonaut Gold Inc.. In their own names, insiders own CA$14m worth of stock in the CA$837m company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Argonaut Gold. 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 Argonaut Gold 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 Argonaut Gold (at least 1 which is potentially serious) , 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.

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