Ora Banda Mining Limited's (ASX:OBM) market cap dropped AU$149m last week; Private equity firms bore the brunt

Key Insights

• Ora Banda Mining's significant private equity firms ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 3 shareholders
• Institutions own 23% of Ora Banda Mining

To get a sense of who is truly in control of Ora Banda Mining Limited (ASX:OBM), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion's share in the company with 37% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 9.9% decline in share price, private equity firms suffered the most losses.

Let's delve deeper into each type of owner of Ora Banda Mining, beginning with the chart below.

View our latest analysis for Ora Banda Mining

What Does The Institutional Ownership Tell Us About Ora Banda Mining?

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.

We can see that Ora Banda Mining does have institutional investors; and they hold a good portion of the company's 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 Ora Banda Mining, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Ora Banda Mining. Looking at our data, we can see that the largest shareholder is TFG Asset Management L.P. with 37% of shares outstanding. Paradice Investment Management Pty Ltd. is the second largest shareholder owning 8.2% of common stock, and Host-Plus Pty. Limited holds about 5.0% of the company stock. In addition, we found that Luke Creagh, the CEO has 3.3% of the shares allocated to their name.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. 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 Ora Banda Mining

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can see that insiders own shares in Ora Banda Mining Limited. As individuals, the insiders collectively own AU$130m worth of the AU$1.4b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. 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 Equity Ownership

Private equity firms hold a 37% stake in Ora Banda Mining. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Ora Banda Mining has 2 warning signs (and 1 which is significant) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.