Home Hedge Funds Individual investors are PetroTal Corp.’s (CVE:TAL) biggest owners and were rewarded after...

Individual investors are PetroTal Corp.’s (CVE:TAL) biggest owners and were rewarded after market cap rose by CA$84m last week

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TSXV:TAL

If you want to know who really controls PetroTal Corp. (CVE:TAL), then you’ll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 42% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, individual investors collectively scored the highest last week as the company hit CA$678m market cap following a 14% gain in the stock.

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

See our latest analysis for PetroTal

ownership-breakdown
TSXV:TAL Ownership Breakdown June 5th 2022

What Does The Institutional Ownership Tell Us About PetroTal?

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 PetroTal. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of PetroTal, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSXV:TAL Earnings and Revenue Growth June 5th 2022

Our data indicates that hedge funds own 10% of PetroTal. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Our data shows that Meridian Capital International Fund is the largest shareholder with 18% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 8.0% by the third-largest shareholder. Additionally, the company’s CEO Manuel Zuniga Pflucker directly holds 0.5% of the total shares outstanding.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of PetroTal

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.

Shareholders would probably be interested to learn that insiders own shares in PetroTal Corp.. In their own names, insiders own CA$50m worth of stock in the CA$678m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public– including retail investors — own 42% stake in the company, and hence can’t easily be ignored. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 18%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

It seems that Private Companies own 8.0%, of the PetroTal stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We’ve spotted 4 warning signs for PetroTal you should be aware of, and 1 of them can’t be ignored.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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. 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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