5E Advanced Materials Inc.'s (ASX:5EA) market cap surged AU$33m last week, individual investors who have a lot riding on the company were rewarded

Key Insights

• The considerable ownership by individual investors in 5E Advanced Materials indicates that they collectively have a greater say in management and business strategy
• A total of 10 investors have a majority stake in the company with 50% ownership
• Institutions own 22% of 5E Advanced Materials

Every investor in 5E Advanced Materials Inc. (ASX:5EA) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors were the biggest beneficiaries of last week’s 17% gain.

Let's delve deeper into each type of owner of 5E Advanced Materials, beginning with the chart below.

Check out our latest analysis for 5E Advanced Materials

What Does The Institutional Ownership Tell Us About 5E Advanced Materials?

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.

As you can see, institutional investors have a fair amount of stake in 5E Advanced Materials. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 5E Advanced Materials, (below). Of course, keep in mind that there are other factors to consider, too.

5E Advanced Materials is not owned by hedge funds. Virtova Capital Management Limited is currently the company's largest shareholder with 12% of shares outstanding. With 9.3% and 8.1% of the shares outstanding respectively, Atlas Precious Metals Inc. and Mayfair Ventures Pte Ltd are the second and third largest shareholders.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of 5E Advanced Materials

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 5E Advanced Materials Inc.. It has a market capitalization of just AU$225m, and insiders have AU$19m worth of shares, in their own names. 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

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 5E Advanced Materials. 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 Company Ownership

We can see that Private Companies own 34%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 6 warning signs we've spotted with 5E Advanced Materials (including 3 which are a bit concerning) .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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. 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.