Stock Analysis

How Much Of Pure Gold Mining Inc. (CVE:PGM) Do Insiders Own?

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TSXV:PGM.H
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Every investor in Pure Gold Mining Inc. (CVE:PGM) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Pure Gold Mining is a smaller company with a market capitalization of CA$704m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Pure Gold Mining.

Check out our latest analysis for Pure Gold Mining

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TSXV:PGM Ownership Breakdown March 5th 2021

What Does The Institutional Ownership Tell Us About Pure Gold Mining?

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.

As you can see, institutional investors have a fair amount of stake in Pure Gold Mining. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Pure Gold Mining's historic earnings and revenue below, but keep in mind there's always more to the story.

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TSXV:PGM Earnings and Revenue Growth March 5th 2021

Pure Gold Mining is not owned by hedge funds. AngloGold Ashanti Limited is currently the company's largest shareholder with 16% of shares outstanding. With 12% and 8.9% of the shares outstanding respectively, Eric Sprott and Van Eck Associates Corporation are the second and third largest shareholders.

Our studies suggest that the top 25 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.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Pure Gold Mining

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 information suggests that insiders maintain a significant holding in Pure Gold Mining Inc.. Insiders own CA$110m worth of shares in the CA$704m company. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- mostly retail investors -- own 50% of Pure Gold Mining. 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 16% of the Pure Gold Mining 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Pure Gold Mining better, we need to consider many other factors. Take risks for example - Pure Gold Mining has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

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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