Yahoo Finance Following a 9.2% decline over last year, recent gains may please Newcrest Mining Limited (ASX:NCM) institutional owners
Key Insights
Given the large stake in the stock by institutions, Newcrest Mining's stock price might be vulnerable to their trading decisions
The top 18 shareholders own 50% of the company
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
If you want to know who really controls Newcrest Mining Limited (ASX:NCM), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 58% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Institutional investors would appreciate the 5.9% increase in share prices last week, given their one-year returns have been disappointing at 9.2%.
Let's take a closer look to see what the different types of shareholders can tell us about Newcrest Mining.
Check out our latest analysis for Newcrest Mining
What Does The Institutional Ownership Tell Us About Newcrest Mining?
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 Newcrest Mining 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Newcrest Mining's historic earnings and revenue below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Newcrest Mining. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 11% of shares outstanding. Orbis Investment Management Limited is the second largest shareholder owning 7.4% of common stock, and State Street Global Advisors, Inc. holds about 5.8% of the company stock.
After doing some more digging, we found that the top 18 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Newcrest Mining
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.
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 data suggests that insiders own under 1% of Newcrest Mining Limited in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own AU$35m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
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 Newcrest Mining , and understanding them should be part of your investment process.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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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