A CA$86m drop in the market cap of Solaris Resources Inc. (TSE:SLS) is not what insiders like to see after purchasing shares recently

Key Insights

• Significant insider control over Solaris Resources implies vested interests in company growth
• 52% of the business is held by the top 4 shareholders
• Insiders have bought recently

Every investor in Solaris Resources Inc. (TSE:SLS) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 41% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

It's interesting to note that insiders have been buying shares recently. Their expectations, however, were not satisfied, as the market cap dropped to CA$503m over the past week.

In the chart below, we zoom in on the different ownership groups of Solaris Resources.

See our latest analysis for Solaris Resources

What Does The Institutional Ownership Tell Us About Solaris Resources?

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.

We can see that Solaris Resources does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Solaris Resources' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Solaris Resources. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Solaris Resources' case, its Top Key Executive, Richard Warke, is the largest shareholder, holding 36% of shares outstanding. With 8.6% and 3.9% of the shares outstanding respectively, BlackRock, Inc. and Daniel Earle are the second and third largest shareholders. Interestingly, the third-largest shareholder, Daniel Earle is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 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 Solaris Resources

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 most recent data indicates that insiders own a reasonable proportion of Solaris Resources Inc.. Insiders own CA$208m worth of shares in the CA$503m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Solaris Resources. 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.

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. To that end, you should learn about the 4 warning signs we've spotted with Solaris Resources (including 2 which are a bit concerning) .

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.