Chesapeake Gold Corp.'s (CVE:CKG) market cap up CA$63m last week, benefiting both individual investors who own 56% as well as insiders
Key Insights
Significant control over Chesapeake Gold by individual investors implies that the general public has more power to influence management and governance-related decisions
A total of 15 investors have a majority stake in the company with 44% ownership
To get a sense of who is truly in control of Chesapeake Gold Corp. (CVE:CKG), it is important to understand the ownership structure of the business. With 56% stake, individual 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).
Following a 64% increase in the stock price last week, individual investors profited the most, but insiders who own 32% stock also stood to gain from the increase.
Let's delve deeper into each type of owner of Chesapeake Gold, beginning with the chart below.
See our latest analysis for Chesapeake Gold
What Does The Institutional Ownership Tell Us About Chesapeake Gold?
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.
Institutions have a very small stake in Chesapeake Gold. 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 company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. 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.
It looks like hedge funds own 7.1% of Chesapeake Gold shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Eric Sprott is currently the largest shareholder, with 13% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 7.1% by the third-largest shareholder.
Our studies suggest that the top 15 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Chesapeake Gold
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
It seems insiders own a significant proportion of Chesapeake Gold Corp.. Insiders have a CA$47m stake in this CA$147m business. We 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 comprising of individual investors, collectively holds 56% of Chesapeake Gold 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 3.9%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Chesapeake Gold is showing 3 warning signs in our investment analysis , and 2 of those make us uncomfortable...
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.
