Painful week for individual investors invested in Neo Performance Materials Inc. (TSE:NEO) after 11% drop, institutions also suffered losses

Key Insights

• Neo Performance Materials' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 23 investors have a majority stake in the company with 50% ownership
• Insiders have been buying lately

To get a sense of who is truly in control of Neo Performance Materials Inc. (TSE:NEO), it is important to understand the ownership structure of the business. With 50% stake, individual investors possess the maximum shares in the company. 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 28% came under pressure after market cap dropped to CA$302m last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Neo Performance Materials.

View our latest analysis for Neo Performance Materials

What Does The Institutional Ownership Tell Us About Neo Performance Materials?

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.

Neo Performance Materials already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Neo Performance Materials, (below). Of course, keep in mind that there are other factors to consider, too.

Neo Performance Materials is not owned by hedge funds. Hastings Technology Metals Limited is currently the company's largest shareholder with 21% of shares outstanding. Mawer Investment Management Ltd. is the second largest shareholder owning 12% of common stock, and Mackenzie Financial Corporation holds about 4.2% of the company stock. Furthermore, CEO Rahim Suleman is the owner of 0.6% of the company's shares.

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 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. 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 Neo Performance Materials

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

We can see that insiders own shares in Neo Performance Materials Inc.. It has a market capitalization of just CA$302m, and insiders have CA$3.8m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 50% stake in Neo Performance Materials. 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.

Public Company Ownership

We can see that public companies hold 21% of the Neo Performance Materials shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Neo Performance Materials better, we need to consider many other factors. Be aware that Neo Performance Materials is showing 2 warning signs in our investment analysis , and 1 of those can't be ignored...

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.