Could First Quantum Minerals Ltd.’s (TSE:FM) Investor Composition Influence The Stock Price?

The big shareholder groups in First Quantum Minerals Ltd. (TSE:FM) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.

First Quantum Minerals is a pretty big company. It has a market capitalization of CA$6.1b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions own shares in the company. Let’s delve deeper into each type of owner, to discover more about First Quantum Minerals.

View our latest analysis for First Quantum Minerals

TSX:FM Ownership Summary June 19th 2020
TSX:FM Ownership Summary June 19th 2020

What Does The Institutional Ownership Tell Us About First Quantum Minerals?

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.

We can see that First Quantum Minerals does have institutional investors; and they hold 32% of the stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of First Quantum Minerals, (below). Of course, keep in mind that there are other factors to consider, too.

TSX:FM Income Statement June 19th 2020
TSX:FM Income Statement June 19th 2020

We note that hedge funds don’t have a meaningful investment in First Quantum Minerals. Our data shows that Pangaea Investment Management Ltd. is the largest shareholder with 19% of shares outstanding. The second and third largest shareholders are FMR LLC and BlackRock, Inc., holding 4.7% and 4.5%, respectively.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of First Quantum Minerals

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders own shares in First Quantum Minerals Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CA$82m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

With a 48% ownership, the general public have some degree of sway over FM. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

We can see that Private Companies own 19%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with First Quantum Minerals (including 1 which is is a bit concerning) .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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. 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. Thank you for reading.