Franco-Nevada Corporation's (TSE:FNV) recent 4.4% pullback adds to one-year year losses, institutional owners may take drastic measures
Significantly high institutional ownership implies Franco-Nevada's stock price is sensitive to their trading actions
A total of 18 investors have a majority stake in the company with 50% ownership
To get a sense of who is truly in control of Franco-Nevada Corporation (TSE:FNV), it is important to understand the ownership structure of the business. With 80% stake, institutions possess the maximum shares in the company. 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 saw their holdings value drop by 4.4% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 7.8% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Franco-Nevada which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Franco-Nevada.
Check out our latest analysis for Franco-Nevada
What Does The Institutional Ownership Tell Us About Franco-Nevada?
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.
Franco-Nevada already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Franco-Nevada's earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Franco-Nevada is not owned by hedge funds. The company's largest shareholder is BlackRock, Inc., with ownership of 8.7%. FMR LLC is the second largest shareholder owning 7.5% of common stock, and Massachusetts Financial Services Company holds about 5.4% of the company stock.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 18 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Franco-Nevada
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.
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 less than 1% of Franco-Nevada Corporation. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CA$237m of stock. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 19% stake in Franco-Nevada. 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.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 1 warning sign for Franco-Nevada 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.
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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.
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