Lithium Chile Inc.'s (CVE:LITH) biggest owners are retail investors who got richer after stock soared 16% last week

Key Insights

• Significant control over Lithium Chile by retail investors implies that the general public has more power to influence management and governance-related decisions
• 49% of the business is held by the top 10 shareholders
• Insiders own 12% of Lithium Chile

A look at the shareholders of Lithium Chile Inc. (CVE:LITH) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, retail investors benefitted the most after the company's market cap rose by CA$23m last week.

In the chart below, we zoom in on the different ownership groups of Lithium Chile.

Check out our latest analysis for Lithium Chile

What Does The Lack Of Institutional Ownership Tell Us About Lithium Chile?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Lithium Chile might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Lithium Chile is not owned by hedge funds. Chengxin Lithium Group Co., Ltd. is currently the largest shareholder, with 18% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 18% and 4.7%, of the shares outstanding, respectively. Albert Kroontje, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Furthermore, CEO Steven Cochrane is the owner of 1.6% of the company's shares.

A deeper look at our ownership data shows that the top 10 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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 Lithium Chile

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Lithium Chile Inc.. Insiders own CA$19m worth of shares in the CA$155m company. 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 substantial 51% stake in Lithium Chile, suggesting it is a fairly popular stock. With this amount 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 vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

It seems that Private Companies own 18%, of the Lithium Chile stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

We can see that public companies hold 18% of the Lithium Chile shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Lithium Chile that you should be aware of before investing here.

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.

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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@simplywallst.com