Guardian Metal Resources PLC (LON:GMET) surges 41%; private companies who own 29% shares profited along with institutions

Key Insights

• The considerable ownership by private companies in Guardian Metal Resources indicates that they collectively have a greater say in management and business strategy
• 52% of the business is held by the top 4 shareholders
• Insider ownership in Guardian Metal Resources is 11%

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Every investor in Guardian Metal Resources PLC (LON:GMET) should be aware of the most powerful shareholder groups. We can see that private companies own the lion's share in the company with 29% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Private companies gained the most after market cap touched UK£76m last week, while institutions who own 23% also benefitted.

In the chart below, we zoom in on the different ownership groups of Guardian Metal Resources.

View our latest analysis for Guardian Metal Resources

What Does The Institutional Ownership Tell Us About Guardian Metal Resources?

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 Guardian Metal Resources. 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. 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 Guardian Metal Resources' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Guardian Metal Resources. The company's largest shareholder is UCAM Ltd, with ownership of 22%. Power Metal Resources plc is the second largest shareholder owning 18% of common stock, and Matel Limited holds about 6.7% of the company stock.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Guardian Metal Resources

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Guardian Metal Resources PLC. Insiders own UK£8.3m worth of shares in the UK£76m 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, who are usually individual investors, hold a 18% stake in Guardian Metal Resources. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 29%, of the Guardian Metal Resources 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.

Public Company Ownership

We can see that public companies hold 18% of the Guardian Metal Resources shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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. Take risks for example - Guardian Metal Resources has 3 warning signs (and 2 which make us uncomfortable) we think you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.