Do Institutions Own Talon Metals Corp. (TSE:TLO) Shares?

By
Simply Wall St
Published
January 12, 2022
TSX:TLO
Source: Shutterstock

The big shareholder groups in Talon Metals Corp. (TSE:TLO) have power over the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Talon Metals is a smaller company with a market capitalization of CA$492m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about Talon Metals.

View our latest analysis for Talon Metals

ownership-breakdown
TSX:TLO Ownership Breakdown January 12th 2022

What Does The Institutional Ownership Tell Us About Talon Metals?

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.

As you can see, institutional investors have a fair amount of stake in Talon Metals. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Talon Metals' historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
TSX:TLO Earnings and Revenue Growth January 12th 2022

We note that hedge funds don't have a meaningful investment in Talon Metals. RCF Management, LLC is currently the company's largest shareholder with 19% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 19% and 2.2%, of the shares outstanding, respectively. Warren Newfield, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Talon Metals

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Shareholders would probably be interested to learn that insiders own shares in Talon Metals Corp.. It has a market capitalization of just CA$492m, and insiders have CA$18m 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

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Talon Metals. 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.

Private Equity Ownership

Private equity firms hold a 38% stake in Talon Metals. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Talon Metals better, we need to consider many other factors. For instance, we've identified 3 warning signs for Talon Metals (1 shouldn't be ignored) that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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