Private companies who have a significant stake must be disappointed along with institutions after Elkem ASA's (OB:ELK) market cap dropped by kr736m

Key Insights

• Significant control over Elkem by private companies implies that the general public has more power to influence management and governance-related decisions
• Sinochem Holdings Corporation Ltd. owns 53% of the company
• Institutions own 22% of Elkem

If you want to know who really controls Elkem ASA (OB:ELK), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are private companies with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 5.0% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 22% stock also took a hit.

Let's delve deeper into each type of owner of Elkem, beginning with the chart below.

View our latest analysis for Elkem

What Does The Institutional Ownership Tell Us About Elkem?

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.

As you can see, institutional investors have a fair amount of stake in Elkem. 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 Elkem, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Elkem. Sinochem Holdings Corporation Ltd. is currently the company's largest shareholder with 53% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 4.1% of the shares outstanding, followed by an ownership of 2.8% by the third-largest shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Elkem

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 data suggests that insiders own under 1% of Elkem ASA in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own kr5.9m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Elkem. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 57%, of the shares on issue. 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 Elkem better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Elkem you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.