Home Private Equity Ora Banda Mining Limited’s (ASX:OBM) stock price dropped 13% last week; private...

Ora Banda Mining Limited’s (ASX:OBM) stock price dropped 13% last week; private equity firms would not be happy

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Key Insights

  • Ora Banda Mining’s significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public

  • 53% of the business is held by the top 3 shareholders

  • Recent purchases by insiders

To get a sense of who is truly in control of Ora Banda Mining Limited (ASX:OBM), it is important to understand the ownership structure of the business. With 41% stake, private equity firms 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.

As market cap fell to AU$358m last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

Let’s delve deeper into each type of owner of Ora Banda Mining, beginning with the chart below.

See our latest analysis for Ora Banda Mining

ownership-breakdownownership-breakdown

ASX:OBM Ownership Breakdown January 22nd 2024

What Does The Institutional Ownership Tell Us About Ora Banda Mining?

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.

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. 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 Ora Banda Mining’s historic earnings and revenue below, but keep in mind there’s always more to the story.

earnings-and-revenue-growthearnings-and-revenue-growth

ASX:OBM Earnings and Revenue Growth January 22nd 2024

We note that hedge funds don’t have a meaningful investment in Ora Banda Mining. The company’s largest shareholder is TFG Asset Management L.P., with ownership of 41%. For context, the second largest shareholder holds about 8.9% of the shares outstanding, followed by an ownership of 3.7% 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.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 53% stake.

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. 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 Ora Banda Mining

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems insiders own a significant proportion of Ora Banda Mining Limited. Insiders have a AU$40m stake in this AU$358m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 27% stake in Ora Banda Mining. 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.

Private Equity Ownership

Private equity firms hold a 41% 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we’ve identified 3 warning signs for Ora Banda Mining (2 can’t be ignored) that you should be aware of.

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.

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.

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