Is Pure Gold Mining Inc.'s (CVE:PGM) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
March 16, 2022
TSXV:PGM
Source: Shutterstock

If you want to know who really controls Pure Gold Mining Inc. (CVE:PGM), then you'll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

With a market capitalization of CA$373m, Pure Gold Mining 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. Let's take a closer look to see what the different types of shareholders can tell us about Pure Gold Mining.

See our latest analysis for Pure Gold Mining

ownership-breakdown
TSXV:PGM Ownership Breakdown March 16th 2022

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

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Pure Gold Mining does have institutional investors; and they hold a good portion of the company's stock. 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. 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.

earnings-and-revenue-growth
TSXV:PGM Earnings and Revenue Growth March 16th 2022

Pure Gold Mining is not owned by hedge funds. AngloGold Ashanti Limited is currently the company's largest shareholder with 20% of shares outstanding. With 9.6% and 5.3% of the shares outstanding respectively, Eric Sprott and Van Eck Associates Corporation are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 22 shareholders have a combined ownership of 50% implying that 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

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.

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 information suggests that insiders maintain a significant holding in Pure Gold Mining Inc.. Insiders own CA$48m worth of shares in the CA$373m 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-- including retail investors -- own 50% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 20% of the Pure Gold Mining shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Pure Gold Mining 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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