A look at the shareholders of True Leaf Brands Inc. (CSE:MJ) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of 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.
True Leaf Brands is a smaller company with a market capitalization of CA$15m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about True Leaf Brands.
See our latest analysis for True Leaf Brands
What Does The Lack Of Institutional Ownership Tell Us About True Leaf Brands?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of True Leaf Brands, for yourself, below.
Hedge funds don't have many shares in True Leaf Brands. With a 24% stake, CEO Darcy Bomford is the largest shareholder. The second largest shareholder with 2.1%, is Michael Harcourt, followed by Kevin Bottomley, with an ownership of 0.8%.
Our studies suggest that the top 8 shareholders collectively control less than 50% 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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of True Leaf Brands
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our information suggests that insiders maintain a significant holding in True Leaf Brands Inc.. It has a market capitalization of just CA$15m, and insiders have CA$4.0m worth of shares in their own names. There's no doubt that we learn useful information from looking at a company's ownership structure and shareholders. However, there are many other factors to consider, such as the risks within the company itself. For example, we've discovered 7 warning signs for True Leaf Brands (of which 2 are major) which any shareholder or potential investor should be aware of.
General Public Ownership
The general public, mostly retail investors, hold a substantial 73% stake in MJ, suggesting it is a fairly popular stock. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand True Leaf Brands better, we need to consider many other factors.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
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