Yahoo Finance Individual investors who hold 58% of Lynas Rare Earths Limited (ASX:LYC) gained 5.4%, institutions profited as well
If you want to know who really controls Lynas Rare Earths Limited (ASX:LYC), then you'll have to look at the makeup of its share registry. With 58% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 5.4% increase in the stock price last week, individual investors profited the most, but institutions who own 41% stock also stood to gain from the increase.
Let's delve deeper into each type of owner of Lynas Rare Earths, beginning with the chart below.
View our latest analysis for Lynas Rare Earths
What Does The Institutional Ownership Tell Us About Lynas Rare Earths?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Lynas Rare Earths 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 Lynas Rare Earths' historic earnings and revenue below, but keep in mind there's always more to the story.
Hedge funds don't have many shares in Lynas Rare Earths. BlackRock, Inc. is currently the largest shareholder, with 6.0% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.0% and 4.9% of the stock.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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 Lynas Rare Earths
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our data suggests that insiders own under 1% of Lynas Rare Earths Limited in their own names. Keep in mind that it's a big company, and the insiders own AU$47m worth of shares. The absolute value might be more important than the proportional share. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
The general public -- including retail investors -- own 58% of Lynas Rare Earths. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Lynas Rare Earths you should be aware of.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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