Should You Be Concerned About Goldquest Mining Corp’s (CVE:GQC) Shareholders?

I am going to take a deep dive into Goldquest Mining Corp’s (TSXV:GQC) most recent ownership structure, not a frequent subject of discussion among individual investors. The impact of a company’s ownership structure affects both its short- and long-term performance. If an activist institution invests the same amount of capital in a stock as a passive long-term pension fund, the implications are potentially different for key corporate financing decisions such as the use of excess cash or the source of financing. While these are more of a long-term investor’s concern, short-term investors may find the impact of institutional trading overwhelming enough to lose out on what could be a potential opportunity. Now I will analyze GQC’s shareholder registry in more detail.

See our latest analysis for Goldquest Mining
TSXV:GQC Ownership_summary May 7th 18
TSXV:GQC Ownership_summary May 7th 18

Institutional Ownership

Institutional investors transact in large blocks which can influence the momentum of stock prices, at least in the short-term, especially when there is a low level of public shares available on the market to trade. A low institutional ownership of 6.78% puts GQC on a list of companies that are not likely exposed to spikes in volatility resulting from institutional trading. Additionally, the company is covered by only 2 analyst, further highlighting its low popularity.

Insider Ownership

Another important group of shareholders are company insiders. Insider ownership has to do more with how the company is managed and less to do with the direct impact of the magnitude of shares trading on the market. GQC insiders hold a significant stake of 10.82% in the company. This level of insider ownership has been found to have a negative impact on companies with consistently low PE ratios (underperformers), while it has been positive in the case of high PE ratio firms (outperformers). It may be interesting to take a look at what company insiders have been doing with their holdings lately. Insider buying may be a sign of upbeat future expectations, however, selling doesn’t necessarily mean the opposite as insiders may be motivated by their personal financial needs.
TSXV:GQC Insider_trading May 7th 18
TSXV:GQC Insider_trading May 7th 18

General Public Ownership

A big stake of 67.43% in GQC is held by the general public. This size of ownership gives retail investors collective power in deciding on major policy decisions such as executive compensation, appointment of directors and acquisitions of businesses. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.

Public Company Ownership

Potential investors in GQC should also look at another important group of investors: other public companies, with a stake of 14.97%, who are primarily invested because of strategic and capital gain interests. An ownership of this size indicates a strong financial backing and has the potential to influence GQC’s business strategy. Thus, investors should dig deeper into GQC’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

Institutional ownership in GQC is not at a level that would concern investors. We are less likely to see sustained downtrends or significant volatility resulting from large institutional trading. However, ownership structure should not be the only focus of your research when constructing an investment thesis around GQC. Rather, you should be examining fundamental factors such as Goldquest Mining’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following:

  1. Future Outlook: What are well-informed industry analysts predicting for GQC’s future growth? Take a look at our free research report of analyst consensus for GQC’s outlook.
  2. Past Track Record: Has GQC been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of GQC’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.