Could Benchmark Metals Inc.’s (CVE:BNCH) Investor Composition Influence The Stock Price?

The big shareholder groups in Benchmark Metals Inc. (CVE:BNCH) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.

Benchmark Metals is a smaller company with a market capitalization of CA$39m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let’s delve deeper into each type of owner, to discover more about Benchmark Metals.

Check out our latest analysis for Benchmark Metals

TSXV:BNCH Ownership Summary, January 27th 2020
TSXV:BNCH Ownership Summary, January 27th 2020

What Does The Institutional Ownership Tell Us About Benchmark 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 Benchmark Metals does have institutional investors; and they hold 7.0% of the stock. 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. 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 Benchmark Metals’s earnings history, below. Of course, the future is what really matters.

TSXV:BNCH Income Statement, January 27th 2020
TSXV:BNCH Income Statement, January 27th 2020

Hedge funds don’t have many shares in Benchmark Metals. Looking at our data, we can see that the largest shareholder is Eric Sprott with 16% of shares outstanding. Sprott Asset Management, LP is the second largest shareholder with 7.0% of common stock, followed by James Greig, holding 2.2% of the stock. James Greig also happens to hold the title of Member of the Board of Directors.

A deeper look at our ownership data shows that the top 8 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

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. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Benchmark Metals

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.

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.

It seems insiders own a significant proportion of Benchmark Metals Inc.. It has a market capitalization of just CA$39m, and insiders have CA$8.2m worth of shares in their own names. 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

The general public, mostly retail investors, hold a substantial 72% stake in BNCH, suggesting it is a fairly popular stock. With this size 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 decline an acquisition or merger that may not improve profitability.

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 5 warning signs we’ve spotted with Benchmark Metals (including 3 which is don’t sit too well with us) .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.