The considerable ownership by individual investors in Lithium Chile indicates that they collectively have a greater say in management and business strategy
A total of 11 investors have a majority stake in the company with 49% ownership
To get a sense of who is truly in control of Lithium Chile Inc. (CVE:LITH), it is important to understand the ownership structure of the business. With 51% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, individual investors collectively scored the highest last week as the company hit CA$136m market cap following a 18% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about Lithium Chile.
What Does The Lack Of Institutional Ownership Tell Us About Lithium Chile?
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. Lithium Chile's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.
TSXV:LITH Earnings and Revenue Growth February 13th 2024
Lithium Chile is not owned by hedge funds. The company's largest shareholder is Gator Capital Ltd., with ownership of 18%. With 18% and 4.7% of the shares outstanding respectively, Chengxin Lithium Group Co., Ltd. and Albert Kroontje are the second and third largest shareholders. Albert Kroontje, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board. Furthermore, CEO Steven Cochrane is the owner of 1.6% of the company's shares.
A deeper look at our ownership data shows that the top 11 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Lithium Chile
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
Our most recent data indicates that insiders own a reasonable proportion of Lithium Chile Inc.. Insiders have a CA$16m stake in this CA$136m business. 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, mostly comprising of individual investors, collectively holds 51% of Lithium Chile shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Private Company Ownership
Our data indicates that Private Companies hold 18%, of the company's shares. 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.
Public Company Ownership
It appears to us that public companies own 18% of Lithium Chile. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
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. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Lithium Chile (at least 2 which can't be ignored) , and understanding them should be part of your investment process.
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.
