What You Need To Know About Shanta Gold Limited's (LON:SHG) Investor Composition

By
Simply Wall St
Published
September 10, 2021
AIM:SHG
Source: Shutterstock

If you want to know who really controls Shanta Gold Limited (LON:SHG), then you'll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. 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 UK£136m, Shanta Gold is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Shanta Gold.

See our latest analysis for Shanta Gold

ownership-breakdown
AIM:SHG Ownership Breakdown September 11th 2021

What Does The Institutional Ownership Tell Us About Shanta Gold?

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 Shanta Gold. 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 Shanta Gold's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
AIM:SHG Earnings and Revenue Growth September 11th 2021

It looks like hedge funds own 18% of Shanta Gold shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Odey Asset Management LLP is currently the largest shareholder, with 13% of shares outstanding. With 5.3% and 5.2% of the shares outstanding respectively, Sustainable Capital Ltd and River and Mercantile Asset Management LLP are the second and third largest shareholders. Furthermore, CEO Eric Zurrin is the owner of 1.1% of the company's shares.

After doing some more digging, we found that the top 16 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Shanta Gold

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

I can report that insiders do own shares in Shanta Gold Limited. As individuals, the insiders collectively own UK£13m worth of the UK£136m company. Some would say this shows alignment of interests between shareholders and the board, though I generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, with a 49% stake in the company, will not 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Shanta Gold better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Shanta Gold .

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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