Nouveau Monde Graphite Inc. (CVE:NOU) stock most popular amongst individual investors who own 46%, while private companies hold 14%
Simply Wall St
5 min read
Key Insights
Nouveau Monde Graphite's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 25 shareholders own 40% of the company
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
Every investor in Nouveau Monde Graphite Inc. (CVE:NOU) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And private companies on the other hand have a 14% ownership in the company.
Let's take a closer look to see what the different types of shareholders can tell us about Nouveau Monde Graphite.
What Does The Institutional Ownership Tell Us About Nouveau Monde Graphite?
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 Nouveau Monde Graphite 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 Nouveau Monde Graphite's historic earnings and revenue below, but keep in mind there's always more to the story.
TSXV:NOU Earnings and Revenue Growth July 29th 2023
We note that hedge funds don't have a meaningful investment in Nouveau Monde Graphite. Looking at our data, we can see that the largest shareholder is Pallinghurst Graphite Limited with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.5% and 1.4% of the stock. Additionally, the company's CEO Eric Desaulniers directly holds 0.5% of the total shares outstanding.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Nouveau Monde Graphite
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
We can see that insiders own shares in Nouveau Monde Graphite Inc.. In their own names, insiders own CA$3.9m worth of stock in the CA$305m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 46% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
Private equity firms hold a 7.2% stake in Nouveau Monde Graphite. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
Private Company Ownership
It seems that Private Companies own 14%, of the Nouveau Monde Graphite stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Nouveau Monde Graphite better, we need to consider many other factors. For example, we've discovered 4 warning signs for Nouveau Monde Graphite (3 shouldn't be ignored!) that you should be aware of before investing here.
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.
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