Individual investors are Galan Lithium Limited's (ASX:GLN) biggest owners and were rewarded after market cap rose by AU$29m last week

Key Insights

• Galan Lithium's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 21 shareholders own 40% of the company
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

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Every investor in Galan Lithium Limited (ASX:GLN) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 60% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors collectively scored the highest last week as the company hit AU$190m market cap following a 18% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Galan Lithium.

Check out our latest analysis for Galan Lithium

What Does The Institutional Ownership Tell Us About Galan Lithium?

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 Galan Lithium. 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 Galan Lithium, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Galan Lithium. The company's largest shareholder is Clean Elements Ltd, with ownership of 18%. For context, the second largest shareholder holds about 3.7% of the shares outstanding, followed by an ownership of 2.9% by the third-largest shareholder. In addition, we found that Juan Pablo de la Vega, the CEO has 2.1% of the shares allocated to their name.

Our studies suggest that the top 21 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Galan Lithium

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own some shares in Galan Lithium Limited. In their own names, insiders own AU$13m worth of stock in the AU$190m 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, who are usually individual investors, hold a substantial 60% stake in Galan Lithium, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 28%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Galan Lithium better, we need to consider many other factors. Be aware that Galan Lithium is showing 2 warning signs in our investment analysis , you should know about...

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.