Retail investors who hold 60% of Fortuna Silver Mines Inc. (TSE:FVI) gained 7.7%, institutions profited as well
Key Insights
Fortuna Silver Mines' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
The top 25 shareholders own 30% of the company
To get a sense of who is truly in control of Fortuna Silver Mines Inc. (TSE:FVI), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 60% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
While retail investors were the group that reaped the most benefits after last week’s 7.7% price gain, institutions also received a 39% cut.
Let's delve deeper into each type of owner of Fortuna Silver Mines, beginning with the chart below.
Check out our latest analysis for Fortuna Silver Mines
What Does The Institutional Ownership Tell Us About Fortuna Silver Mines?
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 Fortuna Silver Mines. 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 Fortuna Silver Mines' historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in Fortuna Silver Mines. The company's largest shareholder is Van Eck Associates Corporation, with ownership of 11%. In comparison, the second and third largest shareholders hold about 2.5% and 1.6% of the stock. In addition, we found that Jorge Ganoza Durant, the CEO has 0.6% of the shares allocated to their name.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Fortuna Silver Mines
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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
Shareholders would probably be interested to learn that insiders own shares in Fortuna Silver Mines Inc.. As individuals, the insiders collectively own CA$13m worth of the CA$1.2b company. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a substantial 60% stake in Fortuna Silver Mines, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
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 2 warning signs for Fortuna Silver Mines 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.
