A great week that adds to Dundee Precious Metals Inc.’s (TSE:DPM) one-year returns, institutional investors who own 62% must be happy

Key Insights

• Given the large stake in the stock by institutions, Dundee Precious Metals’ stock price might be vulnerable to their trading decisions
• 50% of the business is held by the top 15 shareholders
• Recent purchases by insiders

To get a sense of who is truly in control of Dundee Precious Metals Inc. (TSE:DPM), it is important to understand the ownership structure of the business. We can see that institutions own the lion’s share in the company with 62% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week’s 5.0% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 7.0% and last week’s gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Dundee Precious Metals.

See our latest analysis for Dundee Precious Metals

What Does The Institutional Ownership Tell Us About Dundee Precious Metals?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in Dundee Precious Metals. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Dundee Precious Metals’ earnings history below. Of course, the future is what really matters.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Dundee Precious Metals is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 13% of shares outstanding. With 9.9% and 7.8% of the shares outstanding respectively, Van Eck Associates Corporation and First Eagle Investment Management, LLC are the second and third largest shareholders.

After doing some more digging, we found that the top 15 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Dundee Precious Metals

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. 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.

Our most recent data indicates that insiders own less than 1% of Dundee Precious Metals Inc.. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around CA$2.3m worth of shares (at current prices). 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

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dundee Precious Metals. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Dundee Precious Metals is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious…

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.

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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.