Private equity firms are Ora Banda Mining Limited's (ASX:OBM) biggest owners and were rewarded after market cap rose by AU$55m last week

Key Insights

• The considerable ownership by private equity firms in Ora Banda Mining indicates that they collectively have a greater say in management and business strategy
• 52% of the business is held by the top 4 shareholders
• Insider ownership in Ora Banda Mining is 10%

Every investor in Ora Banda Mining Limited (ASX:OBM) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 38% to be precise, is private equity firms. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private equity firms collectively scored the highest last week as the company hit AU$498m market cap following a 13% gain in the stock.

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 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.

We note that hedge funds don't have a meaningful investment in Ora Banda Mining. TFG Asset Management L.P. is currently the company's largest shareholder with 38% of shares outstanding. With 8.3% and 3.4% of the shares outstanding respectively, Paradice Investment Management Pty Ltd. and Luke Creagh are the second and third largest shareholders. Luke Creagh, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Ora Banda Mining

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 a reasonable proportion of Ora Banda Mining Limited. Insiders have a AU$51m stake in this AU$498m business. 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

The general public, who are usually individual investors, hold a 32% stake in Ora Banda Mining. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With an ownership of 38%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

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. Take risks for example - Ora Banda Mining has 1 warning sign we think you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.