Nouveau Monde Graphite Inc.'s (CVE:NOU) stock price dropped 10% last week; retail investors would not be happy

Key Insights

• The considerable ownership by retail investors in Nouveau Monde Graphite indicates that they collectively have a greater say in management and business strategy
• The top 25 shareholders own 43% of the company
• 11% of Nouveau Monde Graphite is held by Institutions

If you want to know who really controls Nouveau Monde Graphite Inc. (CVE:NOU), then you'll have to look at the makeup of its share registry. With 56% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, retail investors endured the biggest losses as the stock fell by 10%.

In the chart below, we zoom in on the different ownership groups of Nouveau Monde Graphite.

See our latest analysis for Nouveau Monde Graphite

What Does The Institutional Ownership Tell Us About Nouveau Monde Graphite?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Nouveau Monde Graphite. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Nouveau Monde Graphite's earnings history below. Of course, the future is what really matters.

Nouveau Monde Graphite is not owned by hedge funds. Our data shows that Pallinghurst Graphite Limited is the largest shareholder with 21% of shares outstanding. Investissement Québec, Investment Arm is the second largest shareholder owning 10% of common stock, and Covalis Capital LLP holds about 1.4% of the company stock.

On studying our ownership data, we found that 25 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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Nouveau Monde Graphite

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can report that insiders do own shares in Nouveau Monde Graphite Inc.. In their own names, insiders own CA$3.7m worth of stock in the CA$353m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 56% of Nouveau Monde Graphite shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Equity Ownership

With a stake of 10%, private equity firms could influence the Nouveau Monde Graphite board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Private Company Ownership

It seems that Private Companies own 21%, of the Nouveau Monde Graphite stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Nouveau Monde Graphite better, we need to consider many other factors. Take risks for example - Nouveau Monde Graphite has 2 warning signs we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.