- Metals and Mining
Institutional investors may adopt severe steps after Major Drilling Group International Inc.'s (TSE:MDI) latest 10% drop adds to a year losses
- Given the large stake in the stock by institutions, Major Drilling Group International's stock price might be vulnerable to their trading decisions
- The top 6 shareholders own 52% of the company
- Insiders have been buying lately
To get a sense of who is truly in control of Major Drilling Group International Inc. (TSE:MDI), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 61% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to CA$759m last week after a 10% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 22% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Major Drilling Group International, which might have negative implications on individual investors.
In the chart below, we zoom in on the different ownership groups of Major Drilling Group International.
View our latest analysis for Major Drilling Group International
What Does The Institutional Ownership Tell Us About Major Drilling Group International?
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 Major Drilling Group International. 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 Major Drilling Group International, (below). Of course, keep in mind that there are other factors to consider, too.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Major Drilling Group International. Looking at our data, we can see that the largest shareholder is FMR LLC with 15% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 10.0% and 8.4%, of the shares outstanding, respectively.
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.
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 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 Major Drilling Group International
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 data suggests that insiders own under 1% of Major Drilling Group International Inc. in their own names. It seems the board members have no more than CA$6.0m worth of shares in the CA$759m company. 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 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Major Drilling Group International. 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 10.0%, 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.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Major Drilling Group International you should know about.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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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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.
Major Drilling Group International
Major Drilling Group International Inc. provides contract drilling services for mining and mineral exploration companies.
Flawless balance sheet and undervalued.