Insiders are the top stockholders in Newfield Resources Limited (ASX:NWF), and the recent 11% drop might have disappointed them

Simply Wall St

Sun, Aug 6, 2023, 7:42 PM 4 min read

Key Insights

Newfield Resources' significant insider ownership suggests inherent interests in company's expansion
The top 5 shareholders own 52% of the company
Institutions own 17% of Newfield Resources

A look at the shareholders of Newfield Resources Limited (ASX:NWF) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to AU$192m last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Newfield Resources.

See our latest analysis for Newfield Resources

ownership-breakdown — ASX:NWF Ownership Breakdown August 7th 2023

What Does The Institutional Ownership Tell Us About Newfield Resources?

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.

We can see that Newfield Resources does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Newfield Resources' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — ASX:NWF Earnings and Revenue Growth August 7th 2023

Newfield Resources is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Rustiyan Oen with 25% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 6.4% by the third-largest shareholder.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Newfield Resources

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. 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 insiders maintain a significant holding in Newfield Resources Limited. It has a market capitalization of just AU$192m, and insiders have AU$60m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Newfield Resources. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

We can see that Private Companies own 29%, of the shares on issue. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Newfield Resources has 3 warning signs (and 1 which is potentially serious) we think you should know about.

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.