Both individual investors who control a good portion of NexGen Energy Ltd. (TSE:NXE) along with institutions must be dismayed after last week's 3.5% decrease
Key Insights
The considerable ownership by individual investors in NexGen Energy indicates that they collectively have a greater say in management and business strategy
A total of 25 investors have a majority stake in the company with 34% ownership
To get a sense of who is truly in control of NexGen Energy Ltd. (TSE:NXE), it is important to understand the ownership structure of the business. With 54% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 3.5% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 38% stock also took a hit.
Let's delve deeper into each type of owner of NexGen Energy, beginning with the chart below.
Check out our latest analysis for NexGen Energy
What Does The Institutional Ownership Tell Us About NexGen Energy?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
NexGen Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 NexGen Energy's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in NexGen Energy. Looking at our data, we can see that the largest shareholder is Mirae Asset Global Investments Co., Ltd. with 4.5% of shares outstanding. L1 Capital Pty. Limited is the second largest shareholder owning 4.2% of common stock, and Mega Uranium Ltd. holds about 3.7% of the company stock. In addition, we found that Leigh Curyer, the CEO has 1.0% of the shares allocated to their name.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of NexGen Energy
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
We can report that insiders do own shares in NexGen Energy Ltd.. The insiders have a meaningful stake worth CA$92m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 54% of NexGen Energy 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.
Public Company Ownership
Public companies currently own 3.7% of NexGen Energy stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for NexGen Energy (of which 1 doesn't sit too well with us!) you should know about.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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.