Institutional owners may take dramatic actions as i-80 Gold Corp.’s (TSE:IAU) recent 14% drop adds to one-year losses

Key Insights

• Institutions’ substantial holdings in i-80 Gold implies that they have significant influence over the company’s share price
• 51% of the business is held by the top 10 shareholders
• Recent purchases by insiders

If you want to know who really controls i-80 Gold Corp. (TSE:IAU), then you’ll have to look at the makeup of its share registry. With 39% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, institutional investors endured the highest losses last week after market cap fell by CA$89m. The recent loss, which adds to a one-year loss of 45% for stockholders, may not sit well with this group of investors. Also referred to as “smart money”, institutions have a lot of sway over how a stock’s price moves. As a result, if the decline continues, institutional investors may be pressured to sell i-80 Gold which might hurt individual investors.

Let’s take a closer look to see what the different types of shareholders can tell us about i-80 Gold.

View our latest analysis for i-80 Gold

What Does The Institutional Ownership Tell Us About i-80 Gold?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

i-80 Gold already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 i-80 Gold’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 i-80 Gold. Our data shows that Equinox Gold Corp. is the largest shareholder with 17% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.7% and 7.3%, of the shares outstanding, respectively. Furthermore, CEO Ewan Downie is the owner of 2.1% of the company’s shares.

We did some more digging and found that 10 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of i-80 Gold

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.

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 i-80 Gold Corp.. It has a market capitalization of just CA$543m, and insiders have CA$15m worth of shares, in their own names. 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

With a 34% ownership, the general public, mostly comprising of individual investors, have some degree of sway over i-80 Gold. 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.

Private Equity Ownership

Private equity firms hold a 7.3% stake in i-80 Gold. 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.

Public Company Ownership

We can see that public companies hold 17% of the i-80 Gold shares on issue. We can’t be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand i-80 Gold better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we’ve spotted with i-80 Gold .

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.

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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.