Southern Alliance Mining Ltd. (Catalist:QNS) insiders seem bullish, own 77% and have been buying more recently

editorial-team@simplywallst.com (Simply Wall St)

Mon, May 20, 2024, 7:48 PM 4 min read

Key Insights

Southern Alliance Mining's significant insider ownership suggests inherent interests in company's expansion
Kok Sam Pek owns 64% of the company
Recent purchases by insiders

To get a sense of who is truly in control of Southern Alliance Mining Ltd. (Catalist:QNS), it is important to understand the ownership structure of the business. We can see that individual insiders own the lion's share in the company with 77% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Notably, insiders have bought shares recently. This could signal that stock prices could go up and insiders are here for it.

In the chart below, we zoom in on the different ownership groups of Southern Alliance Mining.

See our latest analysis for Southern Alliance Mining

ownership-breakdown — Catalist:QNS Ownership Breakdown May 21st 2024

What Does The Lack Of Institutional Ownership Tell Us About Southern Alliance Mining?

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Southern Alliance Mining might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

earnings-and-revenue-growth — Catalist:QNS Earnings and Revenue Growth May 21st 2024

We note that hedge funds don't have a meaningful investment in Southern Alliance Mining. The company's CEO Kok Sam Pek is the largest shareholder with 64% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. In comparison, the second and third largest shareholders hold about 6.9% and 4.6% of the stock. Interestingly, the third-largest shareholder, Teck Tee Teh is also a Chairman of the Board, again, indicating strong insider ownership amongst the company's top shareholders.

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 Southern Alliance Mining

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 that insiders own more than half the Southern Alliance Mining Ltd. stock. This gives them a lot of power. Given it has a market cap of S$237m, that means they have S$182m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Southern Alliance Mining. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Southern Alliance Mining , and understanding them should be part of your investment process.

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.