Owning 35% shares,institutional owners seem interested in Champion Iron Limited (ASX:CIA),

Simply Wall St · 10/14 20:14

Key Insights

  • Given the large stake in the stock by institutions, Champion Iron's stock price might be vulnerable to their trading decisions
  • A total of 9 investors have a majority stake in the company with 51% ownership
  • Insiders own 11% of Champion Iron

A look at the shareholders of Champion Iron Limited (ASX:CIA) can tell us which group is most powerful. With 35% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

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

See our latest analysis for Champion Iron

ownership-breakdown
ASX:CIA Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About Champion Iron?

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.

We can see that Champion Iron does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Champion Iron's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:CIA Earnings and Revenue Growth October 14th 2024

We note that hedge funds don't have a meaningful investment in Champion Iron. Investissement Québec, Investment Arm is currently the largest shareholder, with 8.4% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.1% and 8.0% of the stock. William O’Keeffe, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Champion Iron

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 information suggests that insiders maintain a significant holding in Champion Iron Limited. It has a market capitalization of just AU$3.5b, and insiders have AU$406m worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 30% stake in Champion Iron. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 8.4% stake in Champion Iron. This suggests they can be influential in key policy decisions. 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.

Private Company Ownership

It seems that Private Companies own 16%, of the Champion Iron stock. 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 Champion Iron better, we need to consider many other factors. For instance, we've identified 1 warning sign for Champion Iron that you should be aware of.

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.