In This Article:
Key Insights
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Institutions' substantial holdings in Sandfire Resources implies that they have significant influence over the company's share price
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51% of the business is held by the top 7 shareholders
If you want to know who really controls Sandfire Resources Limited (ASX:SFR), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 76% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And last week, institutional investors ended up benefitting the most after the company hit AU$4.8b in market cap. One-year return to shareholders is currently 65% and last week’s gain was the icing on the cake.
Let's delve deeper into each type of owner of Sandfire Resources, beginning with the chart below.
Check out our latest analysis for Sandfire Resources
What Does The Institutional Ownership Tell Us About Sandfire Resources?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in Sandfire Resources. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Sandfire Resources' historic earnings and revenue below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Sandfire Resources. Australian Super Pty Ltd is currently the largest shareholder, with 15% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.7% and 7.7% of the stock.
We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.