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The big shareholder groups in Champion Iron Limited (ASX:CIA) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Warren Buffett said that he likes 'a business with enduring competitive advantages that is run by able and owner-oriented people'. So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
Champion Iron is not a large company by global standards. It has a market capitalization of AU$953m, which means it wouldn't have the attention of many institutional investors. In the chart below below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholder can tell us about CIA.
Check out our latest analysis for Champion Iron
What Does The Institutional Ownership Tell Us About Champion Iron?
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.
Champion Iron already has institutions on the share registry. Indeed, they own 8.9% of 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Champion Iron, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Champion Iron. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Champion Iron
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
It seems insiders own a significant proportion of Champion Iron Limited. Insiders own AU$143m worth of shares in the AU$953m company. 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.