Retail investors among Colonial Coal International Corp.'s (CVE:CAD) largest stockholders and were hit after last week's 12% price drop
Simply Wall St
4 min read
Key Insights
Significant control over Colonial Coal International by retail investors implies that the general public has more power to influence management and governance-related decisions
A total of 6 investors have a majority stake in the company with 43% ownership
Every investor in Colonial Coal International Corp. (CVE:CAD) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 57% to be precise, is retail investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Following a 12% decrease in the stock price last week, retail investors suffered the most losses, but insiders who own 23% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of Colonial Coal International.
What Does The Lack Of Institutional Ownership Tell Us About Colonial Coal International?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
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. Alternatively, there might be something about the company that has kept institutional investors away. Colonial Coal International might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
TSXV:CAD Earnings and Revenue Growth March 19th 2023
It looks like hedge funds own 15% of Colonial Coal International shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Rosseau Asset Management Ltd. is the largest shareholder with 15% of shares outstanding. With 11% and 7.8% of the shares outstanding respectively, David Austin and David Emri are the second and third largest shareholders. David Austin, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
Our studies suggest that the top 6 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.
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. 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 Colonial Coal International
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
It seems insiders own a significant proportion of Colonial Coal International Corp.. Insiders own CA$59m worth of shares in the CA$257m company. 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 -- including retail investors -- own 57% of Colonial Coal International. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Private Company Ownership
It seems that Private Companies own 4.4%, of the Colonial Coal International stock. 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. Take risks for example - Colonial Coal International has 2 warning signs we think you should be aware of.
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.
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