The big shareholder groups in Mexco Energy Corporation (NYSEMKT:MXC) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.
Mexco Energy is a smaller company with a market capitalization of US$5.3m, 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 many shares in the company. We can zoom in on the different ownership groups, to learn more about Mexco Energy.
What Does The Lack Of Institutional Ownership Tell Us About Mexco Energy?
We don’t tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.
There are multiple explanations for why institutions don’t own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Mexco Energy might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
We note that hedge funds don’t have a meaningful investment in Mexco Energy. With a 47% stake, CEO Nicholas Taylor is the largest shareholder. Next, we have Howard Cox and Thomas Decker as the second and third largest shareholders, holding 9.9% and 2.4%, of the shares outstanding, respectively. Interestingly, Thomas Decker is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company’s top shareholders.
Our analysis suggests that the top 2 shareholders collectively control 56% of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Mexco Energy
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
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 own more than half of Mexco Energy Corporation. This gives them effective control of the company. Given it has a market cap of US$5.3m, that means they have US$3.2m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 38% ownership, the general public have some degree of sway over MXC. 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.
It’s always worth thinking about the different groups who own shares in a company. But to understand Mexco Energy better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 4 warning signs with Mexco Energy (at least 2 which are significant) , and understanding them should be part of your investment process.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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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