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San Gold Corporation - Insider Ownership Assessment

San Gold Corporation - Insider Ownership Assessment

Insider Ownership Assessment as of July 6, 2014

To determine if the company also complies with my second precondition, I have analysed if management's interest is aligned with the interest of the common shareholders. In this insider ownership analyses, I calculate the ownership percentage of the corporate insiders to see if it complies with my preset values for the minimum and maximum share ownership percentage. For these preset values, I refer you to the following table, which was taken from the article: Insider Ownership Analysis - Are the Interests of Management and the Common Shareholders Aligned.

Market cap  Minimum Share Ownership Percentage  Maximum Share Ownership Percentage 
< 100 Million 5.0% 35%
100 -1,000 Million 2.5% 35%
> 1 Billion 1.0% 35%
 

As the current market cap for San Gold Corporation is below 100 million, the minimum share ownership percentage should be 5.0%. The maximum insider ownership is not coupled to the market cap, but is fixed for all companies at 35%, as I do not want the influence of the corporate insiders to be too big.

For more information about how to find your stock's current shareholders, please visit the following page: Company Ownership Search - 5 Free Resources to Find Your Stock's Current Shareholders.

To find out how I define a corporate insider, you can read the following article: Insider Stock Ownership - Which Exclusive Type of Stock Owners Are Your Fellow Shareholders.

Insider Ownership Search on SEDI.ca

According to SEDI the most relevant company ownership information1 is as follows:

Insider Ownership of the Company's Key Management

Key Management2  Main Title  Insider Name  Registered Holder
(if applicable) 
Shares Held  Last Transaction Date 
Board of Directors  Chairman of the Board Brennan, Robert Brian   50,000 2013-05-06
Vice-Chairman Ginn, Dale   1,326,140 2013-04-16
Ginn, Dale Shelley Ginn 30,000 2010-12-14
Management Team  President Kristjansson, Gestur   71,724 2013-06-27
Chief Executive Officer (CEO) Gibson, Gregory   0  
Chief Financial Officer (CFO) Rai, Mandeep   1,000 2014-03-18
Vice President, Exploration  Michaud, Michael Julien    75,000  2013-06-27 
Total Shares Held by Key Management  1,553,864 

Insider Ownership of the Company's Other Officers

Other Officers3  Title  Insider Name  Registered Holder
(if applicable) 
Shares Held  Last Transaction Date 
Board of Directors  Director Anderson, Michael   35,000 2013-12-18
Director Power, Michael   119,000 2013-05-23
Director Harapiak, Stephen William   100,000 2013-04-22
Management Team  Investor Relations Friesen, Tim   NA  
Total Shares Held by Other Officers  254,000   

My Commentary Regarding the Insider Ownership of the Company's Other Officers

According to the data found on SEDI, Mr. Tim Friesen has not been determined as an insider of the company. However, on the company's website Mr. Friesen is presented as one of the company's officers. Therefore, I must assume Mr. Friesen has confidential information about the company. Perhaps Mr. Tim Friesen is willing to disclose how many common shares of the company he owns as of July 6, 2014?

Insider Ownership of the Company's Unconfirmed Insiders

Insider Relationship4  Name  Registered Holder
(if applicable) 
Shares Held  Last Transaction Date 
Director of Issuer, Senior Officer of Issuer Wynne, Hugh   7,954,779 2013-05-15
    Madeleine Wynne 136,000 2013-05-15
    Wynne Drilling Ltd. 295,000 2013-05-15
    Wynne Mining Services Inc. 222,223 2005-06-30
Senior Officer of Issuer Torben, Jensen   0 2012-11-12
Director or Senior Officer of Insider or Subsidiary of Issuer Pirie, George E.   0 2012-03-20
Total Shares Held by Unconfirmed Insiders  8,608,002 

My Commentary Regarding the Insider Ownership of the Company's Unconfirmed Insiders

According to the company's press release of September 11, 2013 Mr. Hugh Wynne is no longer a corporate insider of the company. Therefore, he is no longer obliged to report his insider transactions, which makes his ownership in the company irrelevant.

I was able to find the appointment of Mr. Jensen Torben to the company management team (see the press release of May 01, 2012). However, according to the company's website Mr. Torben is not mentioned in the list of board members, nor as part of the company's management team. Although Mr. Torben owns no shares in the company, I am still wondering if he still receives a salary. Perhaps the company can elucidate what the current role of Mr. Torben is?

Although Mr. George Pirie is still an insider according to the data found on SEDI, I found that this data is no longer accurate as the company announced his resignation on March 25, 2013.

Insider Ownership of the Company's 3-10% Security Holders

3-10% Security Holders  Registered Holder
(if applicable) 
Shares Held  Last Transaction Date 
Harmony Gold Mining Company Limited   7,957,498 2005-06-30
Total Shares Held by 3-10% Security Holders  7,957,498 

My Commentary Regarding the Insider Ownership of the Company's 3-10% Security Holders

Through a google search I found that the 3-10% security holder, Harmony Gold, received these shares as part of the compensation when they sold the Rice Lake Mine to the company for C$7.5 million in 2004 (C$3.5 million cash and C$4 million in shares).

My Conclusion Regarding this Insider Ownership Assessment

Insider Ownership  Shares Held  Total Common Shares Outstanding5  Insider Ownership % 
Total Shares Held by Key Management 1,553,864   0.4%
Total Shares Held by Other Directors 254,000 0.1%
Total Shares Held by Corporate Insiders  1,807,864  373,390,981  0.5% 

The most striking data regards to the ownership of the company's CEO, Mr. Greg Gibson, who doesn't own any shares in the company, although he does own $140,000 worth of "convertible debentures 2013". Mr. Gibson has been a director since September 3, 2013. Before he started as a director he must have done his own due diligence about the company in order to determine whether or not San Gold's future seemed bright enough to accept this job. Perhaps he concluded that the company's future was interesting enough for him to increase his fixed income by accepting a nice salary, but until now he doesn't seem to believe that it is interesting enough to invest his own money in the company's common shares.

I also find it shocking to see that the company's financial experts (Mr. Gestur Kristjansson and Mr. Mandeep Rai: the company's former and current CFO) own so little shares in the company. They have been involved in the company for a long time now and during this time the company has been trading at an enormous discount to it's tangible book value. However, these financial experts still haven't decided to invest more of their own money to acquire the company's common shares. Don't they believe in the company's future prospects?

In total, the corporate insiders hold 1,807,864 shares of the company, which equals to 0.5% of the company's total shares outstanding. As the company has a market cap < 100 million, I would have like to see an insider ownership percentage of at least 5.0%. Therefore I must conclude that the company failed to comply with my second precondition. I would consider it a very bullish signal if management buys additional shares in the company around the current share price, to increase their ownership to at least 5.0% of the company's total shares outstanding.

 

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1 Click this link, to inform yourself about the complete insider information as of July 6, 2014.

2 To find out which management functions I have qualified as key management positions, you can read the following article: Key Management Positions - What Competencies to Look for in Your Stock's Management.

3 Which were found on the company's website or on SEDI.ca

4 According to the data found on SEDI.ca

5 See the Share Statistics, which you can find on the Stock Chart and Share Statistics page by clicking the link provided.

About Jeroen Snoeks

Jeroen Snoeks - UndervaluedEquity.com

Jeroen Snoeks is the founder of UndervaluedEquity.com, a website for investors passionate about investing in undervalued stocks. Through UndervaluedEquity.com, he shares his experience and knowledge and will soon reveal his personal stock portfolio.


 
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