Gold

Equinox Gold Corp.’s (TSE:EQX) institutional investors lost 7.9% last week but have benefitted from longer-term gains

Key Insights

  • Significantly high institutional ownership implies Equinox Gold’s stock price is sensitive to their trading actions
  • 47% of the business is held by the top 25 shareholders
  • Recent sales by insiders

A look at the shareholders of Equinox Gold Corp. (TSE:EQX) can tell us which group is most powerful. We can see that institutions own the lion’s share in the company with 50% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors endured the highest losses after the company’s market cap fell by CA$169m last week. However, the 17% one-year returns may have helped alleviate their overall losses. We would assume however, that they would be on the lookout for weakness in the future.

Let’s delve deeper into each type of owner of Equinox Gold, beginning with the chart below.

View our latest analysis for Equinox Gold

TSX:EQX Ownership Breakdown January 3rd 2024

What Does The Institutional Ownership Tell Us About Equinox Gold?

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 have a fair amount of stake in Equinox Gold. 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 Equinox Gold’s historic earnings and revenue below, but keep in mind there’s always more to the story.

TSX:EQX Earnings and Revenue Growth January 3rd 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Equinox Gold is not owned by hedge funds. The company’s largest shareholder is Van Eck Associates Corporation, with ownership of 10%. Ross Beaty is the second largest shareholder owning 8.2% of common stock, and The Vanguard Group, Inc. holds about 3.0% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. 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 Equinox Gold

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.

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 Equinox Gold Corp.. This is a big company, so it is good to see this level of alignment. Insiders own CA$169m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public– including retail investors — own 41% stake in the company, and hence can’t easily be ignored. 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:

It’s always worth thinking about the different groups who own shares in a company. But to understand Equinox Gold better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Equinox Gold , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.

Valuation is complex, but we’re helping make it simple.

Find out whether Equinox Gold is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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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