Discovery Silver Corp.'s (CVE:DSV) last week's 13% decline must have disappointed individual investors who have a significant stake

By
Simply Wall St
Published
November 24, 2021
TSXV:DSV
Source: Shutterstock

If you want to know who really controls Discovery Silver Corp. (CVE:DSV), then you'll have to look at the makeup of its share registry. We can see that individual investors own the lion's share in the company with 50% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of individual investors took a hit after last week’s 13% price drop, insiders with their 28% also suffered.

Let's take a closer look to see what the different types of shareholders can tell us about Discovery Silver.

View our latest analysis for Discovery Silver

ownership-breakdown
TSXV:DSV Ownership Breakdown November 24th 2021

What Does The Institutional Ownership Tell Us About Discovery Silver?

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.

We can see that Discovery Silver 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. 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 Discovery Silver, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSXV:DSV Earnings and Revenue Growth November 24th 2021

We note that hedge funds don't have a meaningful investment in Discovery Silver. Our data shows that Eric Sprott is the largest shareholder with 24% of shares outstanding. Jupiter Fund Management Plc is the second largest shareholder owning 8.7% of common stock, and Van Eck Associates Corporation holds about 3.9% of the company stock. Additionally, the company's CEO Taj Singh directly holds 0.5% of the total shares outstanding.

A closer look at our ownership figures suggests that the top 22 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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Discovery Silver

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our information suggests that insiders maintain a significant holding in Discovery Silver Corp.. Insiders have a CA$178m stake in this CA$638m business. 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, who are usually individual investors, hold a 50% stake in Discovery Silver. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Discovery Silver better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Discovery Silver (at least 3 which can't be ignored) , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.