Both retail investors who control a good portion of Paladin Energy Ltd (ASX:PDN) along with institutions must be dismayed after last week's 9.3% decrease
Key Insights
Paladin Energy's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 25 shareholders own 50% of the company
Every investor in Paladin Energy Ltd (ASX:PDN) should be aware of the most powerful shareholder groups. With 48% stake, retail investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While institutions, who own 47% shares weren’t spared from last week’s AU$358m market cap drop, retail investors as a group suffered the maximum losses
Let's take a closer look to see what the different types of shareholders can tell us about Paladin Energy.
View our latest analysis for Paladin Energy
What Does The Institutional Ownership Tell Us About Paladin Energy?
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 Paladin Energy does have institutional investors; and they hold a good portion of the company's 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Paladin Energy, (below). Of course, keep in mind that there are other factors to consider, too.
Paladin Energy is not owned by hedge funds. The company's largest shareholder is Mirae Asset Global Investments Co., Ltd., with ownership of 6.1%. Paradice Investment Management Pty Ltd. is the second largest shareholder owning 5.9% of common stock, and ALPS Advisors, Inc. holds about 5.5% of the company stock.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Paladin Energy
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our information suggests that Paladin Energy Ltd insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around AU$20m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Paladin Energy. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
It seems that Private Companies own 3.4%, of the Paladin Energy 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Paladin Energy better, we need to consider many other factors. Be aware that Paladin Energy is showing 1 warning sign in our investment analysis , you should know about...
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.
