Stock Analysis

After losing 36% in the past year, International Tower Hill Mines Ltd. (TSE:ITH) hedge funds owners must be relieved by the recent gain

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Key Insights

  • Significantly high institutional ownership implies International Tower Hill Mines' stock price is sensitive to their trading actions
  • 59% of the business is held by the top 3 shareholders
  • Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of International Tower Hill Mines Ltd. (TSE:ITH) can tell us which group is most powerful. The group holding the most number of shares in the company, around 32% to be precise, is hedge funds. Put another way, the group faces the maximum upside potential (or downside risk).

Last week's CA$14m market cap gain would probably be appreciated by hedge funds investors, especially after a year of 36% losses.

Let's delve deeper into each type of owner of International Tower Hill Mines, beginning with the chart below.

See our latest analysis for International Tower Hill Mines

TSX:ITH Ownership Breakdown March 15th 2023

What Does The Institutional Ownership Tell Us About International Tower Hill Mines?

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 International Tower Hill Mines. 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 International Tower Hill Mines, (below). Of course, keep in mind that there are other factors to consider, too.

TSX:ITH Earnings and Revenue Growth March 15th 2023

It would appear that 32% of International Tower Hill Mines 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. Paulson & Co. Inc. is currently the largest shareholder, with 32% of shares outstanding. In comparison, the second and third largest shareholders hold about 14% and 13% of the stock.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of International Tower Hill Mines

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own under 1% of International Tower Hill Mines Ltd. in their own names. It appears that the board holds about CA$880k worth of stock. This compares to a market capitalization of CA$152m. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over International Tower Hill Mines. 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.

Private Equity Ownership

With an ownership of 14%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for International Tower Hill Mines (1 is a bit concerning!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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