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A look at the shareholders of Emerald Resources NL (ASX:EMR) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.’
Emerald Resources is a smaller company with a market capitalization of AU$119m, so it may still be flying under the radar of many institutional investors. Taking a look at the our data on the ownership groups (below), it’s seems that institutions don’t own many shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about EMR.
Check out our latest analysis for Emerald Resources
ASX:EMR Ownership Summary February 7th 19What Does The Lack Of Institutional Ownership Tell Us About Emerald Resources?
Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Emerald Resources might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
ASX:EMR Income Statement Export February 7th 19We note that hedge funds don’t have a meaningful investment in Emerald Resources. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Emerald Resources
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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 Emerald Resources NL. Insiders own AU$45m worth of shares in the AU$119m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.
General Public Ownership
The general public, who are mostly retail investors, collectively hold 55% of Emerald Resources shares. With this size 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 decline an acquisition or merger that may not improve profitability.
Private Company Ownership
It seems that Private Companies own 7.3%, of the EMR stock. 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.
