Could The Chibougamau Independent Mines Inc. (CVE:CBG) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
February 03, 2020
TSXV:CBG

A look at the shareholders of Chibougamau Independent Mines Inc. (CVE:CBG) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Chibougamau Independent Mines is a smaller company with a market capitalization of CA$6.1m, 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 take a closer look to see what the different types of shareholder can tell us about Chibougamau Independent Mines.

Check out our latest analysis for Chibougamau Independent Mines

TSXV:CBG Ownership Summary, February 3rd 2020
TSXV:CBG Ownership Summary, February 3rd 2020

What Does The Institutional Ownership Tell Us About Chibougamau Independent Mines?

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 own 17% of Chibougamau Independent Mines. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Chibougamau Independent Mines, (below). Of course, keep in mind that there are other factors to consider, too.

TSXV:CBG Income Statement, February 3rd 2020
TSXV:CBG Income Statement, February 3rd 2020

Chibougamau Independent Mines is not owned by hedge funds. The company's largest shareholder is Lotan Holdings Inc., with ownership of 13%, The second largest shareholder is Vérendrye Capital Corporation holding 4.2%.

On studying our ownership data, we found that 2 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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

Insider Ownership Of Chibougamau Independent Mines

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

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.

Our most recent data indicates that insiders own a reasonable proportion of Chibougamau Independent Mines Inc.. Insiders own CA$832k worth of shares in the CA$6.1m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public -- mostly retail investors -- own 69% of Chibougamau Independent Mines. 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. Be aware that Chibougamau Independent Mines is showing 6 warning signs in our investment analysis , and 3 of those don't sit too well with us...

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.

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.

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