Identify Non$-$Marginal Investors

We need to consider the future cash flow of the business to assess Santos ltd sustainability and profitability. However, the future cash flows must be discounted using the appropriate rate.

As discussed in week $2,$ WACC is often used as an approximation for the rate. CAPM is often used as an approximation for the cost of equity. However, when there is a significantly high percentage of non$-$marginal investors, other methods must be employed. In this assignment, we are only going to apply DGM as an alternative to CAPM and compare the two models. Your investigation into the type of investors in Santos ltd will assist in determining which model should be relied upon.

Focus your attention on identifying non$-$marginal investors, such as founders, insiders, directors, and related companies like suppliers. Individual names, family trusts, private companies $($mostly$),$ share plans, and DRPs are all considered as non$-$marginals. Nominees, custodians, banks, and investment companies are all considered marginal investors and should be ignored from discussion.

When there is a high percentage of non$-$marginal investors, other calculation methods $($such as DGM$)$ must be considered in addition to CAPM. No marks are awarded for identifying marginal investors.

In addition to providing evidence of your research into non$-$marginal investors, create a table listing the percentage of marginal vs$.$ non$-$marginal investors.

$\%$ of Marginal $\%$ of Non$-$marginal Total $(\%)$

Top $20$ shareholders

Remaining shareholders

Total $(\%)100\%$

State clearly your assumptions of investors outside the top $20.($you may refer Refinitive workspace to justify$)$