Do Insiders Own Shares In Chakana Copper Corp. (CVE:PERU)?

By
Simply Wall St
Published
June 09, 2020
TSXV:PERU

Every investor in Chakana Copper Corp. (CVE:PERU) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

With a market capitalization of CA$18m, Chakana Copper is a small cap stock, so it might not be well known by many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Chakana Copper.

View our latest analysis for Chakana Copper

TSXV:PERU Ownership Summary June 9th 2020
TSXV:PERU Ownership Summary June 9th 2020

What Does The Institutional Ownership Tell Us About Chakana Copper?

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 Chakana Copper does have institutional investors; and they hold 6.4% of the stock. 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 Chakana Copper's earnings history, below. Of course, the future is what really matters.

TSXV:PERU Income Statement June 9th 2020
TSXV:PERU Income Statement June 9th 2020

We note that hedge funds don't have a meaningful investment in Chakana Copper. The company's largest shareholder is Gold Fields Limited, with ownership of 17%, The second and third largest shareholders are Thomas Wharton and U.S. Global Investors, Inc., holding 8.0% and 6.4%, respectively.

A deeper look at our ownership data shows that the top 6 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder 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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Chakana Copper

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.

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 most recent data indicates that insiders own a reasonable proportion of Chakana Copper Corp.. It has a market capitalization of just CA$18m, and insiders have CA$3.0m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly retail investors, hold a substantial 60% stake in PERU, suggesting it is a fairly popular stock. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Public Company Ownership

We can see that public companies hold 17%, of the PERU 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for Chakana Copper (1 is potentially serious!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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. 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. Thank you for reading.

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