Could Sotkamo Silver AB’s (NGM:SOSI) Investor Composition Influence The Stock Price?

A look at the shareholders of Sotkamo Silver AB (NGM:SOSI) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. We also tend to see lower insider ownership in companies that were previously publicly owned.

Sotkamo Silver is not a large company by global standards. It has a market capitalization of kr551m, which means it wouldn’t have the attention of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let’s delve deeper into each type of owner, to discover more about Sotkamo Silver.

Check out our latest analysis for Sotkamo Silver

NGM:SOSI Ownership Summary, January 17th 2020
NGM:SOSI Ownership Summary, January 17th 2020

What Does The Institutional Ownership Tell Us About Sotkamo Silver?

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 Sotkamo Silver does have institutional investors; and they hold 8.9% of the 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 Sotkamo Silver’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

NGM:SOSI Income Statement, January 17th 2020
NGM:SOSI Income Statement, January 17th 2020

We note that hedge funds don’t have a meaningful investment in Sotkamo Silver. The company’s largest shareholder is Ilmarinen Pension Insurance Co. Ltd, Asset Management Arm, with ownership of 8.9%, The second largest shareholder with 3.1%, is Hexof Oy, followed by Hentilä & Lindborg Oy, with an ownership of 2.7%.

Our studies suggest that the top 6 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.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Sotkamo Silver

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.

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 most recent data indicates that insiders own less than 1% of Sotkamo Silver AB. But they may have an indirect interest through a corporate structure that we haven’t picked up on. It has a market capitalization of just kr551m, and the board has only kr123k worth of shares in their own names. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 83% of Sotkamo Silver shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 7.8%, of the SOSI stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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 – Sotkamo Silver has 3 warning signs we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.