Founders Metals Inc. (CVE:FDR) surges 15%; retail investors who own 59% shares profited along with institutions

Key Insights

• The considerable ownership by retail investors in Founders Metals indicates that they collectively have a greater say in management and business strategy
• 41% of the business is held by the top 11 shareholders
• Insiders have bought recently

A look at the shareholders of Founders Metals Inc. (CVE:FDR) can tell us which group is most powerful. The group holding the most number of shares in the company, around 59% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While retail investors were the group that benefitted the most from last week’s CA$23m market cap gain, institutions too had a 25% share in those profits.

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

Check out our latest analysis for Founders Metals

What Does The Institutional Ownership Tell Us About Founders Metals?

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.

We can see that Founders Metals 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 Founders Metals, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Founders Metals. The company's largest shareholder is 1832 Asset Management L.P., with ownership of 13%. In comparison, the second and third largest shareholders hold about 11% and 5.9% of the stock. Nicholas Stajduhar, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

A deeper look at our ownership data shows that the top 11 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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 Founders Metals

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.

Our information suggests that insiders maintain a significant holding in Founders Metals Inc.. It has a market capitalization of just CA$157m, and insiders have CA$23m 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

The general public, mostly comprising of individual investors, collectively holds 59% of Founders Metals shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Founders Metals better, we need to consider many other factors. For instance, we've identified 3 warning signs for Founders Metals that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com