Insiders are the top stockholders in Montauk Renewables, Inc. (NASDAQ:MNTK), and the recent 9.3% drop might have disappointed them

Key Insights

• Montauk Renewables' significant insider ownership suggests inherent interests in company's expansion
• 55% of the business is held by the top 2 shareholders
• Institutions own 32% of Montauk Renewables

Every investor in Montauk Renewables, Inc. (NASDAQ:MNTK) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As market cap fell to US$611m last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Montauk Renewables.

View our latest analysis for Montauk Renewables

What Does The Institutional Ownership Tell Us About Montauk Renewables?

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.

As you can see, institutional investors have a fair amount of stake in Montauk Renewables. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Montauk Renewables' historic earnings and revenue below, but keep in mind there's always more to the story.

Montauk Renewables is not owned by hedge funds. John Copelyn is currently the company's largest shareholder with 40% of shares outstanding. Peresec Prime Brokers (Pty) Ltd, Asset Management Arm is the second largest shareholder owning 14% of common stock, and Theventheran Govender holds about 12% of the company stock. Theventheran Govender, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 Montauk Renewables

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. 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 information suggests that insiders own more than half of Montauk Renewables, Inc.. This gives them effective control of the company. That means they own US$329m worth of shares in the US$611m company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 14% stake in Montauk Renewables. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

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

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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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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.