In the wake of Ramaco Resources, Inc.'s (NASDAQ:METC) latest US$52m market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Given the large stake in the stock by institutions, Ramaco Resources' stock price might be vulnerable to their trading decisions
• A total of 7 investors have a majority stake in the company with 52% ownership
• Insiders own 10% of Ramaco Resources

If you want to know who really controls Ramaco Resources, Inc. (NASDAQ:METC), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 41% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors endured the highest losses after the company's share price fell by 9.6% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 55% might not go down well especially with this category of shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Ramaco Resources which might hurt individual investors.

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

Check out our latest analysis for Ramaco Resources

What Does The Institutional Ownership Tell Us About Ramaco Resources?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Ramaco Resources 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Ramaco Resources' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Ramaco Resources. The company's largest shareholder is Yorktown Partners LLC, with ownership of 28%. For context, the second largest shareholder holds about 6.1% of the shares outstanding, followed by an ownership of 4.7% by the third-largest shareholder. Randall Atkins, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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 Ramaco Resources

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. 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 most recent data indicates that insiders own a reasonable proportion of Ramaco Resources, Inc.. It has a market capitalization of just US$502m, and insiders have US$52m worth of shares in their own names. 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 usually individual investors, hold a 20% stake in Ramaco Resources. 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.

Private Equity Ownership

With a stake of 28%, private equity firms could influence the Ramaco Resources board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ramaco Resources better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Ramaco Resources .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.