Stock Analysis

Individual investors who have a significant stake must be disappointed along with institutions after New Gold Inc.'s (TSE:NGD) market cap dropped by CA$109m

  •  Updated
TSX:NGD
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If you want to know who really controls New Gold Inc. (TSE:NGD), then you'll have to look at the makeup of its share registry. With 47% 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 45% shares weren’t spared from last week’s CA$109m market cap drop, individual investors as a group suffered the maximum losses

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

If you're not interested in researching NGD's ownership structure, we have a free list of interesting investing ideas to potentially inspire your next investment!

ownership-breakdown
TSX:NGD Ownership Breakdown September 27th 2022

What Does The Institutional Ownership Tell Us About New Gold?

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.

New Gold already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see New Gold's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
TSX:NGD Earnings and Revenue Growth September 27th 2022

New Gold is not owned by hedge funds. The company's largest shareholder is Van Eck Associates Corporation, with ownership of 10%. With 7.6% and 5.0% of the shares outstanding respectively, William Bollinger and azValor Asset Management SGIIC, S.A.U. are the second and third largest shareholders.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of New 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.

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 report that insiders do own shares in New Gold Inc.. As individuals, the insiders collectively own CA$57m worth of the CA$723m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over New Gold. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

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 New Gold you should know about.

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.

Valuation is complex, but we're helping make it simple.

Find out whether New Gold is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About TSX:NGD

New Gold

New Gold Inc., an intermediate gold mining company, engages in the exploration, development, and operation of mineral properties.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation5
Future Growth4
Past Performance2
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Undervalued with reasonable growth potential.