Institutions profited after Iris Energy Limited’s (NASDAQ:IREN) market cap rose US$86m last week but individual investors profited the most

Key Insights

• The considerable ownership by individual investors in Iris Energy indicates that they collectively have a greater say in management and business strategy

• A total of 25 investors have a majority stake in the company with 36% ownership

• 40% of Iris Energy is held by Institutions

If you want to know who really controls Iris Energy Limited (NASDAQ:IREN), then you’ll have to look at the makeup of its share registry. We can see that individual investors own the lion’s share in the company with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that benefitted the most from last week’s US$86m market cap gain, institutions too had a 40% share in those profits.

Let’s delve deeper into each type of owner of Iris Energy, beginning with the chart below.

See our latest analysis for Iris Energy

What Does The Institutional Ownership Tell Us About Iris Energy?

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.

We can see that Iris Energy does have institutional investors; and they hold a good portion of the company’s stock. 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 Iris Energy’s earnings history below. Of course, the future is what really matters.

Iris Energy is not owned by hedge funds. Castle Hook Partners LP is currently the company’s largest shareholder with 3.7% of shares outstanding. In comparison, the second and third largest shareholders hold about 2.9% and 2.1% of the stock. William Roberts, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. 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 Iris Energy

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. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

We can report that insiders do own shares in Iris Energy Limited. The insiders have a meaningful stake worth US$100m. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 53% of Iris Energy shares. 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:

It’s always worth thinking about the different groups who own shares in a company. But to understand Iris Energy better, we need to consider many other factors. For instance, we’ve identified 2 warning signs for Iris Energy that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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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.