FLEX LNG Ltd. (NYSE:FLNG) adds US$87m in market cap and insiders have a 44% stake in that gain

Key Insights

• FLEX LNG's significant insider ownership suggests inherent interests in company's expansion
• 51% of the business is held by the top 4 shareholders
• Institutions own 22% of FLEX LNG

Every investor in FLEX LNG Ltd. (NYSE:FLNG) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 44% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by US$87m last week.

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

See our latest analysis for FLEX LNG

What Does The Institutional Ownership Tell Us About FLEX LNG?

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

FLEX LNG is not owned by hedge funds. Our data shows that John Fredriksen is the largest shareholder with 43% of shares outstanding. With 2.9% and 2.5% of the shares outstanding respectively, BlackRock, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 FLEX LNG

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 information suggests that insiders maintain a significant holding in FLEX LNG Ltd.. It is very interesting to see that insiders have a meaningful US$573m stake in this US$1.3b business. 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 34% 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. Take risks for example - FLEX LNG has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about.

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.