Ferronordic AB (publ)'s (STO:FNM) market cap up kr191m last week, benefiting both private companies who own 28% as well as insiders

Key Insights

• Significant control over Ferronordic by private companies implies that the general public has more power to influence management and governance-related decisions
• The top 5 shareholders own 52% of the company
• Recent sales by insiders

Every investor in Ferronordic AB (publ) (STO:FNM) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 28% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While private companies were the group that benefitted the most from last week’s kr191m market cap gain, insiders too had a 27% share in those profits.

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

View our latest analysis for Ferronordic

What Does The Institutional Ownership Tell Us About Ferronordic?

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.

Ferronordic 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 Ferronordic's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Ferronordic. Skandinavkonsult i Stockholm AB is currently the company's largest shareholder with 17% of shares outstanding. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 7.8% by the third-largest shareholder. Additionally, the company's CEO Lars Corneliusson directly holds 6.4% of the total shares outstanding.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Ferronordic

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Ferronordic AB (publ). It has a market capitalization of just kr1.2b, and insiders have kr320m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 23% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

Our data indicates that Private Companies hold 28%, of the company's shares. 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:

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