Red Hill Minerals Limited (ASX:RHI) adds AU$42m in market cap and insiders have a 43% stake in that gain

Key Insights

• Insiders appear to have a vested interest in Red Hill Minerals' growth, as seen by their sizeable ownership
• A total of 2 investors have a majority stake in the company with 52% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Red Hill Minerals Limited (ASX:RHI) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit AU$313m market cap following a 16% gain in the stock.

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

View our latest analysis for Red Hill Minerals

What Does The Lack Of Institutional Ownership Tell Us About Red Hill Minerals?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. 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. Red Hill Minerals might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Red Hill Minerals. Looking at our data, we can see that the largest shareholder is China Baowu Steel Group Co.,Ltd with 31% of shares outstanding. Joshua Pitt is the second largest shareholder owning 20% of common stock, and Neil Tomkinson holds about 14% of the company stock. Joshua Pitt, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Red Hill Minerals

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.

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 most recent data indicates that insiders own a reasonable proportion of Red Hill Minerals Limited. It has a market capitalization of just AU$313m, and insiders have AU$135m worth of shares in their own names. 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

The general public, who are usually individual investors, hold a 13% stake in Red Hill Minerals. 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 Company Ownership

It seems that Private Companies own 43%, of the Red Hill Minerals stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Red Hill Minerals better, we need to consider many other factors. Be aware that Red Hill Minerals is showing 1 warning sign in our investment analysis , you should know about...

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.