Significantly high institutional ownership implies Forsys Metals' stock price is sensitive to their trading actions
55% of the business is held by the top 3 shareholders
A look at the shareholders of Forsys Metals Corp. (TSE:FSY) can tell us which group is most powerful. With 49% stake, hedge funds 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.
Last week’s 16% gain means that hedge funds investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. One-year return to shareholders is currently 36% and last week’s gain was the icing on the cake.
Let's delve deeper into each type of owner of Forsys Metals, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Forsys Metals?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Forsys Metals already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Forsys Metals' earnings history below. Of course, the future is what really matters.
It would appear that 49% of Forsys Metals shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Leo Fund Managers Limited is currently the company's largest shareholder with 33% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 5.9% by the third-largest shareholder. Additionally, the company's CEO Mark Frewin directly holds 0.6% of the total shares outstanding.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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 Forsys Metals
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 most recent data indicates that insiders own some shares in Forsys Metals Corp.. It has a market capitalization of just CA$141m, and insiders have CA$1.7m worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 43% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Forsys Metals. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
It's always worth thinking about the different groups who own shares in a company. But to understand Forsys Metals better, we need to consider many other factors. Be aware that Forsys Metals is showing 2 warning signs in our investment analysis , and 1 of those shouldn't be ignored...
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.