Here's What Rainbow Rare Earths Limited's (LON:RBW) Shareholder Ownership Structure Looks Like

A look at the shareholders of Rainbow Rare Earths Limited (LON:RBW) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Rainbow Rare Earths is not a large company by global standards. It has a market capitalization of UK£95m, which means it wouldn't have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don't own many shares in the company. Let's delve deeper into each type of owner, to discover more about Rainbow Rare Earths.

Check out our latest analysis for Rainbow Rare Earths

What Does The Institutional Ownership Tell Us About Rainbow Rare Earths?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Institutions have a very small stake in Rainbow Rare Earths. That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. So if the company itself can improve over time, we may well see more institutional buyers in the future. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

Rainbow Rare Earths is not owned by hedge funds. Adonis Pouroulis is currently the company's largest shareholder with 11% of shares outstanding. With 8.4% and 6.1% of the shares outstanding respectively, Robert Kampf and Gibraltar International Trust Corporation Ltd are the second and third largest shareholders. Additionally, the company's CEO George Sidney Bennett directly holds 5.7% of the total shares outstanding.

On studying our ownership data, we found that 14 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Rainbow Rare Earths

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 information suggests that insiders maintain a significant holding in Rainbow Rare Earths Limited. Insiders have a UK£30m stake in this UK£95m business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 53% of Rainbow Rare Earths shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

We can see that Private Companies own 11%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Rainbow Rare Earths is showing 5 warning signs in our investment analysis , and 3 of those don't sit too well with us...

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. 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.
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