Mount Gibson Iron Limited’s (ASX:MGX) share price fell 12% last week; public companies would not be happy

A look at the shareholders of Mount Gibson Iron Limited (ASX:MGX) can tell us which group is more powerful. And the group that holds the biggest slice of the pie is made up of 51%-owned state-owned companies. In other words, the group faces the maximum upside potential (or downside risk).

As a result, public companies as a group suffered the highest losses last week after the market capitalization plummeted by A$67 million.

Let’s dive deeper into each Mount Gibson Iron owner type, starting with the chart below.

Check out our latest analysis for Mount Gibson Iron

ASX: MGX Ownership Breakdown January 26, 2022

What does institutional ownership tell us about Mount Gibson Iron?

Institutional investors typically 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.

Mount Gibson Iron already has institutions on the stock register. Indeed, they hold a respectable stake in the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. It is not uncommon to see a sharp decline in the stock price if two large institutional investors attempt to sell a stock at the same time. So it’s worth checking out Mount Gibson Iron’s past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.

ASX: MGX Earnings and Revenue Growth January 26, 2022

Mount Gibson Iron is not owned by hedge funds. The company’s largest shareholder is APAC Resources Limited with a 37% stake. Shoucheng Holdings Limited is the second largest shareholder with 13% of the common stock and FMR LLC owns approximately 8.2% of the company’s stock.

To make our study more interesting, we found that the top 2 shareholders hold a majority stake in the company, which means they are powerful enough to influence company decisions.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There is some analyst coverage of the stock, but it could still become better known over time.

Mount Gibson Iron Insider Ownership

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

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Mount Gibson Iron Limited. We note, however, that insiders may have an indirect interest through a private company or other corporate structure. It has a market capitalization of just AU$472 million and the board holds only AU$3.8 million of shares in its own name. Many tend to prefer to see a board with larger holdings. A good next step might be to take a look at this free summary of insider buying and selling.

General public property

With 30% ownership, the general public, consisting mostly of individual investors, has some influence over Mount Gibson Iron. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Private Company Ownership

We can see that private companies own 3.4% of the shares issued. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Ownership of a public company

Public companies currently own 51% of the shares of Mount Gibson Iron. We cannot be sure, but it is quite possible that it is a strategic issue. Businesses can be similar or work together.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Mount Gibson Iron, we need to consider many other factors. Take risks for example – Mount Gibson Iron has 3 warning signs (and 1 of concern) that we think you should know about.

Ultimately the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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

Karen J. Nelson