Stock Analysis

Ora Banda Mining Limited's (ASX:OBM) market cap surged AU$86m last week, private equity firms who have a lot riding on the company were rewarded

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Key Insights

  • Significant control over Ora Banda Mining by private equity firms implies that the general public has more power to influence management and governance-related decisions
  • 53% of the business is held by the top 3 shareholders
  • Insiders have been buying lately

Every investor in Ora Banda Mining Limited (ASX:OBM) should be aware of the most powerful shareholder groups. We can see that private equity firms own the lion's share in the company with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, private equity firms benefitted the most after the company's market cap rose by AU$86m last week.

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

See our latest analysis for Ora Banda Mining

ASX:OBM Ownership Breakdown November 30th 2023

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

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Ora Banda Mining. 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 Ora Banda Mining, (below). Of course, keep in mind that there are other factors to consider, too.

ASX:OBM Earnings and Revenue Growth November 30th 2023

Hedge funds don't have many shares in Ora Banda Mining. The company's largest shareholder is TFG Asset Management L.P., with ownership of 41%. Meanwhile, the second and third largest shareholders, hold 8.9% and 3.7%, of the shares outstanding, respectively. Luke Creagh, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Ora Banda Mining

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.

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.

It seems insiders own a significant proportion of Ora Banda Mining Limited. It has a market capitalization of just AU$410m, and insiders have AU$45m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 28% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ora Banda Mining. 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 Equity Ownership

With a stake of 41%, private equity firms could influence the Ora Banda Mining board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 4 warning signs for Ora Banda Mining (2 are potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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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