Private equity firms own 21% of FLSmidth & Co. A/S (CPH:FLS) shares but retail investors control 58% of the company

Key Insights

• Significant control over FLSmidth by retail investors implies that the general public has more power to influence management and governance-related decisions
• 40% of the business is held by the top 25 shareholders
• Institutions own 20% of FLSmidth

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If you want to know who really controls FLSmidth & Co. A/S (CPH:FLS), then you'll have to look at the makeup of its share registry. With 58% stake, retail investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, private equity firms make up 21% of the company’s shareholders.

In the chart below, we zoom in on the different ownership groups of FLSmidth.

View our latest analysis for FLSmidth

What Does The Institutional Ownership Tell Us About FLSmidth?

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.

FLSmidth already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see FLSmidth's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in FLSmidth. Altor Equity Partners AB is currently the company's largest shareholder with 10% of shares outstanding. Lundbeckfonden BioCapital is the second largest shareholder owning 10% of common stock, and The Vanguard Group, Inc. holds about 3.6% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of FLSmidth

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 FLSmidth & Co. A/S insiders own under 1% of the company. Keep in mind that it's a big company, and the insiders own kr.55m worth of shares. The absolute value might be more important than the proportional share. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 58% stake in FLSmidth, suggesting it is a fairly popular stock. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Equity Ownership

Private equity firms hold a 21% stake in FLSmidth. This suggests they can be influential in key policy decisions. 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:

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 - FLSmidth has 1 warning sign we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.