Institutional investors may overlook the recent £40m drop in Kenmare Resources plc’s (LON:KMR) market cap as long-term earnings remain positive

Any investor in Kenmare Resources plc (LON:KMR) should be aware of the most powerful shareholder groups. With 63%, institutions own the maximum shares in the company. That is, the group will benefit most when the stock goes up (or lose most when it goes down).

Losing money investing is something no shareholder enjoys, least of all institutional investors, who saw their shares plummet 8.3% last week. However, the 15% annual return to shareholders might have softened the blow. But they would probably be wary of future losses.

Let’s dive deeper into each type of Kenmare Resources owner, starting with the table below.

View our latest analysis for Kenmare Resources

LSE:KMR ownership breakdown April 30, 2022

What Does Institutional Ownership Tell Us About Kenmare Resources?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they’re often more excited about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially as they grow.

Kenmare Resources already has institutions on the share register. In fact, they own a respectable stake in the company. This means that the analysts who work for these institutes have looked at the stock and like it. But just like everyone else, they can be wrong. When multiple institutions own a stock, there is always a risk that they will find themselves in a “crowded trade”. When such a trade goes awry, multiple parties can compete to sell shares quickly. This risk is higher in a company without a growth history. You can see Kenmare Resources historical earnings and earnings below, but remember there’s still more to be told.

Profit and Revenue Growth
LSE:KMR Earnings and Revenue Growth April 30, 2022

Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. Kenmare Resources is not owned by any hedge funds. Our data shows that the Oman Investment Authority is the largest shareholder with 21% of outstanding shares. Meanwhile, the second- and third-largest shareholders hold 19% and 8.0% of the outstanding shares, respectively.

To make our study more interesting, we found that the four largest shareholders control more than half of the company, which means that this group has a significant influence on the company’s decision-making.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. There are many analysts covering the stock, so it might be worth seeing what they’re forecasting as well.

Insider Ownership of Kenmare Resources

The definition of corporate insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management runs the business, but the CEO is accountable to the board even if he or she is a member.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

We can report that insiders own shares in Kenmare Resources plc. In their own name, insiders own £4.7m worth of shares in the £449m company. This shows at least some alignment. You can click here to see if these Insiders have bought or sold.

General Public Property

The general public, typically individual investors, own 14% of Kenmare Resources. While this group may not necessarily be in charge, it certainly can have a real impact on how the company is run.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Kenmare Resources we need to consider many other factors. Case in point: We discovered it 1 warning sign for Kenmare Resources you should be aware of this.

If you’re like me, you might want to think about whether this company is going to grow or shrink. Luckily, you can check out this free report that includes analyst forecasts for the future.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not match the figures in the full year report.

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

About Nina Snider

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