Ora Banda Mining Limited's (ASX:OBM) market cap surged AU$36m last week, private equity firms who have a lot riding on the company were rewarded
Simply Wall St
5 min read
Key Insights
The considerable ownership by private equity firms in Ora Banda Mining indicates that they collectively have a greater say in management and business strategy
Every investor in Ora Banda Mining Limited (ASX:OBM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 44% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Clearly, private equity firms benefitted the most after the company's market cap rose by AU$36m last week.
Let's delve deeper into each type of owner of Ora Banda Mining, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Ora Banda Mining?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Ora Banda Mining already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Ora Banda Mining's earnings history below. Of course, the future is what really matters.
ASX:OBM Earnings and Revenue Growth March 8th 2023
Hedge funds don't have many shares in Ora Banda Mining. The company's largest shareholder is TFG Asset Management L.P., with ownership of 44%. For context, the second largest shareholder holds about 6.1% of the shares outstanding, followed by an ownership of 3.5% by the third-largest shareholder. Luke Creagh, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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 Ora Banda Mining
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
It seems insiders own a significant proportion of Ora Banda Mining Limited. Insiders own AU$21m worth of shares in the AU$164m company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 20% stake in Ora Banda Mining. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Equity Ownership
Private equity firms hold a 44% stake in Ora Banda Mining. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Private Company Ownership
We can see that Private Companies own 8.5%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Ora Banda Mining better, we need to consider many other factors. Be aware that Ora Banda Mining is showing 2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist 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.
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