Lindian Resources Limited's (ASX:LIN) market cap up AU$79m last week, benefiting both individual investors who own 47% as well as insiders

Key Insights

• Significant control over Lindian Resources by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 13 investors have a majority stake in the company with 51% ownership
• Insiders own 33% of Lindian Resources

To get a sense of who is truly in control of Lindian Resources Limited (ASX:LIN), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s AU$79m market cap gain, insiders too had a 33% share in those profits.

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

Check out our latest analysis for Lindian Resources

What Does The Lack Of Institutional Ownership Tell Us About Lindian Resources?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Lindian Resources' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Lindian Resources. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Lindian Resources' case, its Top Key Executive, Asimwe Matungwa Kabunga, is the largest shareholder, holding 11% of shares outstanding. Ven Capital Pty Ltd is the second largest shareholder owning 9.0% of common stock, and Rohan Patnaik holds about 6.9% of the company stock.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 51% implying that no single shareholder 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. 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 Lindian Resources

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.

Our information suggests that insiders maintain a significant holding in Lindian Resources Limited. Insiders have a AU$161m stake in this AU$482m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 47% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lindian Resources. 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 20%, 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. Be aware that Lindian Resources is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...

Of course this may not be the best stock to buy. So take a peek at this free 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.

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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.