Both Public Companies Who Control a Good Portion of DRDGOLD Limited (NYSE:DRD) Along With Institutions Must Be Dismayed After Last Week's 7.6% Decrease

Simply Wall St ·  09/06 21:33

Key Insights

  • The considerable ownership by public companies in DRDGOLD indicates that they collectively have a greater say in management and business strategy
  • The largest shareholder of the company is Sibanye Stillwater Limited with a 50% stake
  • Institutions own 27% of DRDGOLD

Every investor in DRDGOLD Limited (NYSE:DRD) should be aware of the most powerful shareholder groups. With 50% stake, public companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 27% shares weren't spared from last week's US$69m market cap drop, public companies as a group suffered the maximum losses

Let's take a closer look to see what the different types of shareholders can tell us about DRDGOLD.

Check out our latest analysis for DRDGOLD

NYSE:DRD Ownership Breakdown September 6th 2023

What Does The Institutional Ownership Tell Us About DRDGOLD?

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.

We can see that DRDGOLD does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 DRDGOLD, (below). Of course, keep in mind that there are other factors to consider, too.

NYSE:DRD Earnings and Revenue Growth September 6th 2023

We note that hedge funds don't have a meaningful investment in DRDGOLD. Sibanye Stillwater Limited is currently the company's largest shareholder with 50% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Van Eck Associates Corporation is the second largest shareholder owning 7.0% of common stock, and Public Investment Corporation Limited holds about 3.5% of the company stock.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of DRDGOLD

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.

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 information suggests that DRDGOLD Limited insiders own under 1% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. It seems the board members have no more than US$1.1m worth of shares in the US$835m company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over DRDGOLD. 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.

Public Company Ownership

It appears to us that public companies own 50% of DRDGOLD. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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. To that end, you should learn about the 2 warning signs we've spotted with DRDGOLD (including 1 which is a bit unpleasant) .

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

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