Is the shareholding of Tamboran Resources Limited (ASX: TBN) biased in favor of insiders?



The large shareholder groups of Tamboran Resources Limited (ASX: TBN) have power over the company. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. I like to see at least a little insider ownership. As Charlie Munger said, “Show me the incentive and I’ll show you the result.

With a market cap of A $ 229 million, Tamboran Resources is a small cap stock, so it might not be well known to many institutional investors. Our analysis of company ownership, below, shows that institutional investors have yet to buy much of the company. Let’s take a closer look at what different types of shareholders can tell us about Tamboran Resources.

See our latest review for Tamboran Resources

ASX: Breakdown of TBN property October 2, 2021

What does institutional ownership tell us about Tamboran’s resources?

Institutional investors generally compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

Since institutions only own a small portion of Tamboran’s resources, many may not have spent much time examining the stock. But it is clear that some have; and they liked it enough to buy it. So if the business itself can improve over time, we may well see more institutional buyers in the future. It is not uncommon to see a sharp rise in stock prices if several institutional investors attempt to buy a stock at the same time. So check out the historical earnings path below, but keep in mind that it’s the future that matters most.

profit and revenue growth
ASX: TBN Profit and Revenue Growth October 2, 2021

Our data shows that hedge funds own 37% of Tamboran Resources. This catches my attention as hedge funds sometimes try to influence management or make changes that will create short-term shareholder value. Looking at our data, we can see that the largest shareholder is Longview Petroleum, LLC with 22% of the shares outstanding. In comparison, the second and third shareholders hold around 20% and 11% of the capital. In addition, the CEO of the company, Joel Riddle, directly owns 0.6% of the total shares outstanding.

A more detailed study of the register of shareholders showed us that 3 of the main shareholders hold a considerable share of the ownership of the company, through their 52% stake.

While studying the institutional ownership of a company can add value to your research, it is also recommended that you research analyst recommendations to better understand the expected performance of a stock. As far as I know, there is no analyst coverage of the company, so it probably goes under the radar.

Insider Ownership of Tamboran Resources

The definition of business insiders can be subjective and vary from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Insider ownership is positive when it indicates that executives think like the real owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.

I can report that insiders own shares of Tamboran Resources Limited. As individuals, the insiders collectively own AU $ 18 million worth of the company of A $ 229 million. Some would say this shows the alignment of interests between shareholders and the board, although I generally prefer to see larger insider holdings. But it might be worth checking out if these insiders have sold.

General public property

The general public, with a 21% stake in the company, will not be easily ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in line with other large shareholders.

Owned by a private company

We can see that the private companies own 34% of the issued shares. It is difficult to draw conclusions from this fact alone, so it is worth considering who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get an overview, we have to take other information into account as well. Note that Tamboran Resources displays 3 warning signs in our investment analysis , and 2 of them make us uncomfortable …

Sure this might not be the best stock to buy. Therefore, you may want to see our free set of interesting prospects benefiting from a favorable financial situation.

NB: The figures in this article are calculated from data for the last twelve months, which refer to the 12-month period ending on the last date of the month of date of the financial statement. This may not be consistent with the figures in the annual report for the entire year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.

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