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Can We See Significant Institutional Ownership On The Premier Oil plc (LON:PMO) Share Register?

Simply Wall St

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A look at the shareholders of Premier Oil plc (LON:PMO) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that have been privatized tend to have low insider ownership.

Premier Oil has a market capitalization of UK£670m, so we would expect some institutional investors to have noticed the stock. In the chart below below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about PMO.

Check out our latest analysis for Premier Oil

LSE:PMO Ownership Summary, July 17th 2019

What Does The Institutional Ownership Tell Us About Premier Oil?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Premier Oil already has institutions on the share registry. Indeed, they own 86% of the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Premier Oil's historic earnings and revenue, below, but keep in mind there's always more to the story.

LSE:PMO Income Statement, July 17th 2019

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Premier Oil is not owned by hedge funds. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Premier Oil

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. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Premier Oil plc. It seems the board members have no more than UK£2.0m worth of shares in the UK£670m company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 13% ownership, the general public have some degree of sway over PMO. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

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.

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. Thank you for reading.