Key Insights
- Significantly high institutional ownership implies Forsys Metals’ stock price is sensitive to their trading actions
- A total of 3 investors have a majority stake in the company with 56% ownership
- Using data from company’s past performance alongside ownership research, one can better assess the future performance of a company
To get a sense of who is truly in control of Forsys Metals Corp. (TSE:FSY), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is hedge funds. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And as as result, hedge funds investors reaped the most rewards after the company’s stock price gained 16% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 84%.
Let’s take a closer look to see what the different types of shareholders can tell us about Forsys Metals.
Check out our latest analysis for Forsys Metals
What Does The Institutional Ownership Tell Us About Forsys Metals?
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.
Forsys Metals 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. 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 Forsys Metals’ historic earnings and revenue below, but keep in mind there’s always more to the story.
It would appear that 49% of Forsys Metals shares are controlled by hedge funds. That’s interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company’s largest shareholder is Leo Fund Managers Limited, with ownership of 30%. Meanwhile, the second and third largest shareholders, hold 18% and 7.6%, of the shares outstanding, respectively. In addition, we found that Mark Frewin, the CEO has 0.6% of the shares allocated to their name.
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. As far as we can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.
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.. As individuals, the insiders collectively own CA$2.0m worth of the CA$168m company. This shows at least some alignment, but we usually like to see larger insider holdings. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public– including retail investors — own 41% stake in the company, and hence can’t easily be ignored. 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.
Next Steps:
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. Take risks for example – Forsys Metals has 1 warning sign we think you should be aware of.
If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.
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.
Valuation is complex, but we’re helping make it simple.
Find out whether Forsys Metals is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
