Institutions profited after NextSource Materials Inc.'s (TSE:NEXT) market cap rose CA$41m last week but individual investors profited the most

Key Insights

• The considerable ownership by individual investors in NextSource Materials indicates that they collectively have a greater say in management and business strategy
• 48% of the business is held by the top 9 shareholders
• Institutional ownership in NextSource Materials is 47%

A look at the shareholders of NextSource Materials Inc. (TSE:NEXT) can tell us which group is most powerful. We can see that individual investors own the lion's share in the company with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that reaped the most benefits after last week’s 35% price gain, institutions also received a 47% cut.

Let's delve deeper into each type of owner of NextSource Materials, beginning with the chart below.

View our latest analysis for NextSource Materials

What Does The Institutional Ownership Tell Us About NextSource Materials?

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.

NextSource 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 NextSource Materials, (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 NextSource Materials. Our data shows that Vision Blue Resources Ltd. is the largest shareholder with 47% of shares outstanding. For context, the second largest shareholder holds about 0.7% of the shares outstanding, followed by an ownership of 0.3% by the third-largest shareholder.

Our studies suggest that the top 9 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.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of NextSource Materials

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.

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 report that insiders do own shares in NextSource Materials Inc.. It has a market capitalization of just CA$156m, and insiders have CA$2.8m worth of shares, in their own names. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 52% of NextSource Materials shares. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 6 warning signs we've spotted with NextSource Materials (including 3 which are concerning) .

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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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.