Nasdaq
華爾街日報Waratah Minerals Limited's (ASX:WTM) market cap dropped AU$20m last week; Retail investors bore the brunt
Key Insights
- Waratah Minerals' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
- The top 22 shareholders own 46% of the company
- 19% of Waratah Minerals is held by Institutions
If you want to know who really controls Waratah Minerals Limited (ASX:WTM), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 54% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And last week, retail investors endured the biggest losses as the stock fell by 11%.
Let's delve deeper into each type of owner of Waratah Minerals, beginning with the chart below.
Check out our latest analysis for Waratah Minerals
What Does The Institutional Ownership Tell Us About Waratah Minerals?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Waratah Minerals already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Waratah Minerals' historic earnings and revenue below, but keep in mind there's always more to the story.
Waratah Minerals is not owned by hedge funds. The company's largest shareholder is Gladstone Mining (Wa) Pty Ltd, with ownership of 8.7%. With 5.9% and 5.6% of the shares outstanding respectively, Farjoy Pty Limited and 1832 Asset Management L.P. are the second and third largest shareholders. Additionally, the company's CEO Peter Duerden directly holds 2.4% of the total shares outstanding.
On studying our ownership data, we found that 22 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Waratah Minerals
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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.
Shareholders would probably be interested to learn that insiders own shares in Waratah Minerals Limited. As individuals, the insiders collectively own AU$12m worth of the AU$159m company. Some would say this shows alignment of interests between shareholders and the board, though we 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, mostly comprising of individual investors, collectively holds 54% of Waratah Minerals shares. With this amount 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 vote on acquisitions or mergers that may not improve profitability.
Private Company Ownership
We can see that Private Companies own 20%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Waratah Minerals better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Waratah Minerals you should be aware of, and 2 of them make us uncomfortable.
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.
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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.