Newcore Gold Ltd. (CVE:NCAU) surges 12%; retail investors who own 56% shares profited along with institutions

Key Insights

• The considerable ownership by retail investors in Newcore Gold indicates that they collectively have a greater say in management and business strategy
• A total of 22 investors have a majority stake in the company with 44% ownership
• Insider ownership in Newcore Gold is 14%

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To get a sense of who is truly in control of Newcore Gold Ltd. (CVE:NCAU), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 56% to be precise, is retail investors. Put another way, the group faces the maximum upside potential (or downside risk).

While retail investors were the group that reaped the most benefits after last week’s 12% price gain, institutions also received a 30% cut.

In the chart below, we zoom in on the different ownership groups of Newcore Gold.

See our latest analysis for Newcore Gold

What Does The Institutional Ownership Tell Us About Newcore Gold?

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.

Newcore Gold already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Newcore Gold, (below). Of course, keep in mind that there are other factors to consider, too.

Newcore Gold is not owned by hedge funds. Our data shows that Franklin Resources, Inc. is the largest shareholder with 7.0% of shares outstanding. Aegis Financial Corporation is the second largest shareholder owning 6.3% of common stock, and Blayne Johnson holds about 4.6% of the company stock. Blayne Johnson, who is the third-largest shareholder, also happens to hold the title of Lead Director. In addition, we found that Luke Alexander, the CEO has 2.1% of the shares allocated to their name.

Our studies suggest that the top 22 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Newcore Gold

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Newcore Gold Ltd.. Insiders have a CA$23m stake in this CA$160m 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 substantial 56% stake in Newcore Gold, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Newcore Gold you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.