Do Institutions Own Canadian Natural Resources Limited (TSE:CNQ) Shares?

Simply Wall St

Sat, Aug 8, 2020, 6:50 AM 4 min read

If you want to know who really controls Canadian Natural Resources Limited (TSE:CNQ), then you'll have to look at the makeup of its share registry. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Companies that have been privatized tend to have low insider ownership.

Canadian Natural Resources has a market capitalization of CA$32b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholder can tell us about Canadian Natural Resources.

See our latest analysis for Canadian Natural Resources

ownership-breakdown — TSX:CNQ Ownership Breakdown August 8th 2020

What Does The Institutional Ownership Tell Us About Canadian Natural Resources?

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.

We can see that Canadian Natural Resources does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Canadian Natural Resources's historic earnings and revenue, below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — TSX:CNQ Earnings and Revenue Growth August 8th 2020

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 Canadian Natural Resources. Looking at our data, we can see that the largest shareholder is Capital Research and Management Company with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.4% and 3.4%, of the shares outstanding, respectively.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 19 shareholders, meaning that no one shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Canadian Natural Resources

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.

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.

We can see that insiders own shares in Canadian Natural Resources Limited. It is a very large company, and board members collectively own CA$714m worth of shares (at current prices). I sometimes take an interest in whether they have been buying or selling.

General Public Ownership

With a 25% ownership, the general public have some degree of sway over CNQ. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks, for example - Canadian Natural Resources has 4 warning signs (and 2 which are significant) we think 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.

This article by Simply Wall St is general in nature. 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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