Key Insights

• Significant insider control over FLEX LNG implies vested interests in company growth
• 50% of the business is held by the top 4 shareholders

To get a sense of who is truly in control of FLEX LNG Ltd. (NYSE:FLNG), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 43% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Despite recent sales, insiders own the most shares in the company. Following last week's 3.8% decline in share price, the group also suffered the most losses.

In the chart below, we zoom in on the different ownership groups of FLEX LNG.

What Does The Institutional Ownership Tell Us About FLEX LNG?

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.

FLEX LNG 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. 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 FLEX LNG's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in FLEX LNG. Our data shows that John Fredriksen is the largest shareholder with 43% of shares outstanding. For context, the second largest shareholder holds about 3.0% of the shares outstanding, followed by an ownership of 2.5% by the third-largest shareholder.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 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 FLEX LNG

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.

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 FLEX LNG Ltd.. Insiders own US$551m worth of shares in the US$1.3b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

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. Take risks for example - FLEX LNG has 3 warning signs (and 1 which can't be ignored) we think you should know about.

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.

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.