Institutional investors have a lot riding on NexGen Energy Ltd. (TSE:NXE) with 47% ownership
In This Article:
Key Insights
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Institutions' substantial holdings in NexGen Energy implies that they have significant influence over the company's share price
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39% of the business is held by the top 25 shareholders
If you want to know who really controls NexGen Energy Ltd. (TSE:NXE), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And things are looking up for institutional investors after the company gained CA$180m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 53%.
Let's take a closer look to see what the different types of shareholders can tell us about NexGen Energy.
See our latest analysis for NexGen Energy
What Does The Institutional Ownership Tell Us About NexGen Energy?
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.
NexGen Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 NexGen Energy's historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in NexGen Energy. L1 Capital Pty. Limited is currently the company's largest shareholder with 4.3% of shares outstanding. The second and third largest shareholders are Mega Uranium Ltd. and Mirae Asset Global Investments Co., Ltd., with an equal amount of shares to their name at 3.5%. Furthermore, CEO Leigh Curyer is the owner of 0.9% of the company's shares.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.