Stock Analysis

Individual investors among Platinum Group Metals Ltd.'s (TSE:PTM) largest stockholders and were hit after last week's 14% price drop

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TSX:PTM
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Every investor in Platinum Group Metals Ltd. (TSE:PTM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 58% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to CA$192m last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Platinum Group Metals.

View our latest analysis for Platinum Group Metals

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

What Does The Institutional Ownership Tell Us About Platinum Group Metals?

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.

We can see that Platinum Group Metals does have institutional investors; and they hold a good portion of the company's stock. 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 Platinum Group Metals' historic earnings and revenue below, but keep in mind there's always more to the story.

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

We note that hedge funds don't have a meaningful investment in Platinum Group Metals. Hosken Consolidated Investments Limited is currently the company's largest shareholder with 25% of shares outstanding. For context, the second largest shareholder holds about 9.2% of the shares outstanding, followed by an ownership of 3.3% by the third-largest shareholder.

Our studies suggest that the top 25 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.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Platinum Group Metals

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 Platinum Group Metals Ltd. in their own names. It appears that the board holds about CA$333k worth of stock. This compares to a market capitalization of CA$192m. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 58% of Platinum Group Metals shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Public Company Ownership

It appears to us that public companies own 25% of Platinum Group Metals. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Platinum Group Metals better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with Platinum Group Metals (including 1 which is a bit unpleasant) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

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About TSX:PTM

Platinum Group Metals

Platinum Group Metals Ltd. engages in the exploration and development of platinum and palladium 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)
Valuation0
Future Growth0
Past Performance0
Financial Health6
Dividends0

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

Flawless balance sheet with weak fundamentals.