How Much Of Paramount Gold Nevada Corp. (NYSEMKT:PZG) Do Insiders Own?

By
Simply Wall St
Published
January 08, 2020
AMEX:PZG

If you want to know who really controls Paramount Gold Nevada Corp. (NYSEMKT:PZG), 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 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.

Paramount Gold Nevada is not a large company by global standards. It has a market capitalization of US$22m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own many shares in the company. Let's delve deeper into each type of owner, to discover more about Paramount Gold Nevada.

View 5 warning signs we detected for Paramount Gold Nevada

AMEX:PZG Ownership Summary, January 8th 2020
AMEX:PZG Ownership Summary, January 8th 2020

What Does The Institutional Ownership Tell Us About Paramount Gold Nevada?

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.

Institutions own less than 5% of Paramount Gold Nevada. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

AMEX:PZG Income Statement, January 8th 2020
AMEX:PZG Income Statement, January 8th 2020

Hedge funds don't have many shares in Paramount Gold Nevada. The company's largest shareholder is Albert Friedberg, with ownership of 18%, The second and third largest shareholders are Seabridge Gold Inc. and The Vanguard Group, Inc., holding 8.2% and 0.7%, respectively.

Our studies suggest that the top 20 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 studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Paramount Gold Nevada

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.

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 a reasonable proportion of Paramount Gold Nevada Corp.. Insiders have a US$4.2m stake in this US$22m business. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- mostly retail investors -- own 71% of Paramount Gold Nevada. 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.

Public Company Ownership

It appears to us that public companies own 8.2% of PZG. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

For example, we've discovered 5 warning signs for Paramount Gold Nevada (of which 2 are major) which any shareholder or potential investor should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

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