ioneer Ltd's (ASX:INR) market cap touched AU$1.1b last week, benefiting both individual investors who own 51% as well as institutions

By
Simply Wall St
Published
March 22, 2022
ASX:INR
Source: Shutterstock

If you want to know who really controls ioneer Ltd (ASX:INR), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 51% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that reaped the most benefits after last week’s 20% price gain, institutions also received a 18% cut.

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

See our latest analysis for ioneer

ownership-breakdown
ASX:INR Ownership Breakdown March 22nd 2022

What Does The Institutional Ownership Tell Us About ioneer?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in ioneer. 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. 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 ioneer's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
ASX:INR Earnings and Revenue Growth March 22nd 2022

It would appear that 8.9% of ioneer shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Our data shows that Centaurus Capital Limited is the largest shareholder with 8.9% of shares outstanding. With 7.0% and 4.2% of the shares outstanding respectively, Sibanye Battery Metals Pty Ltd and The Vanguard Group, Inc. are the second and third largest shareholders. In addition, we found that Bernard Rower, the CEO has 3.1% of the shares allocated to their name.

Our studies suggest that the top 25 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.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of ioneer

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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Shareholders would probably be interested to learn that insiders own shares in ioneer Ltd. In their own names, insiders own AU$84m worth of stock in the AU$1.1b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 51% of ioneer. 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 15%, 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. Case in point: We've spotted 5 warning signs for ioneer you should be aware of, and 2 of them are potentially serious.

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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