Every investor in Pura Vida Energy NL (ASX:PVD) should be aware of the most powerful shareholder groups. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.’
With a market capitalization of AU$5.9m, Pura Vida Energy is a small cap stock, so it might not be well known by many institutional investors. Taking a look at the our data on the ownership groups (below), it’s seems that institutional investors have not yet purchased shares. We can zoom in on the different ownership groups, to learn more about PVD.
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What Does The Lack Of Institutional Ownership Tell Us About Pura Vida Energy?
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. Alternatively, there might be something about the company that has kept institutional investors away. Pura Vida Energy’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.
Hedge funds don’t have many shares in Pura Vida Energy. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Pura Vida Energy
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
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.