When deciding whether to invest in a company there are several things investors look for, but one that should be high up on the list is whether or not directors have “skin in the game”.
A prime example of this is Andrew “Twiggy” Forrest’s investment in his iron ore start-up Fortescue Metals Group (ASX:FMG) 17 years ago.
Fortescue is now the fourth largest iron ore producer in the world and the largest iron ore tenement holder in Western Australia, beating both BHP (ASX:BHP) and Rio Tinto (ASX:RIO) in terms of size of landholding.
But back in 2003 Fortescue was just another iron ore hopeful vying for a seat at the table with the big boys. And through it all, Forrest had a fair chunk of his own cash tied up in the company, even through sub-$US40-a-tonne iron ore prices.
Forrest is still Fortescue’s largest backer with a 36.35 per cent stake.
But it is even more critical to know whether or not directors have invested their own cash in junior explorers that aren’t making any money yet.
An analysis of the 600+ ASX-listed resources companies that count directors as shareholders showed that for 241, or roughly 38 per cent, directors had a substantial shareholding (5 per cent or above).
Here is a list of directors that are the largest shareholders in the ASX-listed companies they run:
Andrew ForrestFortescue36.25%Anthony BillisTribune Resources32.57%Bruce GrayTigers Realm Coal39.42%Charles BassEagle Mountain Mining35.24%Ching-Tiem HuangSoon Mining39.61%David DeitzGullewa21.54%Ding Poj BorAsaplus Resources29.04%Graham ChrispCentrex Metals35.13%Greg & Douglas SolomonTasman Resources19.00%John TerpuGreat Southern Mining30.63%Lindsay DudfieldJindalee Resources33.64%Randal Lloyd SwickCougar Metals38.37%Raphael GeminderPact Group44.26%Tee Sin LipCI Resources29.77%Tiger BrownAstron Corporation76.88%Xiaojing WangAustralia United Mining55.91%
