Insiders are the top stockholders in FLEX LNG Ltd. (OB:FLNG), and the recent 8.9% drop might have disappointed them

Key Insights

• Significant insider control over FLEX LNG implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 51% ownership
• Institutional ownership in FLEX LNG is 20%

To get a sense of who is truly in control of FLEX LNG Ltd. (OB:FLNG), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 45% 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 as a group endured the highest losses after market cap fell by kr1.7b.

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

View our latest analysis for FLEX LNG

What Does The Institutional Ownership Tell Us About FLEX LNG?

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.

FLEX LNG already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 FLEX LNG, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in FLEX LNG. The company's largest shareholder is John Fredriksen, with ownership of 45%. With 2.7% and 2.1% of the shares outstanding respectively, BlackRock, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of FLEX LNG

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

It seems insiders own a significant proportion of FLEX LNG Ltd.. It has a market capitalization of just kr18b, and insiders have kr7.9b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over FLEX LNG. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand FLEX LNG better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for FLEX LNG (of which 2 are significant!) you should know about.

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.