The big shareholder groups in Southern Cross Exploration NL (ASX:SXX) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.
Southern Cross Exploration is not a large company by global standards. It has a market capitalization of AU$6.5m, which means it wouldn’t have the attention of many institutional investors. In the chart below below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about SXX.
See our latest analysis for Southern Cross Exploration
What Does The Institutional Ownership Tell Us About Southern Cross Exploration?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors own 7.5% of Southern Cross Exploration. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Southern Cross Exploration, (below). Of course, keep in mind that there are other factors to consider, too.
Southern Cross Exploration is not owned by hedge funds. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Southern Cross Exploration
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
It seems insiders own a significant proportion of Southern Cross Exploration NL. Insiders own AU$3.2m worth of shares in the AU$6.5m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.