The Fortescue Ltd (ASX: FMG) share price is wreaking the most havoc on the benchmark today.
Shares in the iron ore miner are down a debilitating 9% to $18.50, adding to a disastrous run for Fortescue shares since January. The impactful blow to Andrew 'Twiggy' Forrest's pride and joy follows a sizeable $1.9 billion worth of shares in the miner going up for sale last night.
Rubbing salt in the wound of all remaining shareholders, the sale was reportedly marketed at a discount of between 6.1% and 8.8% to yesterday's closing price. In turn, the Fortescue share price is moving into the discounted range today.
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Who is selling $1.9 billion worth of shares?
An official release disclosing the details of the almost $2 billion trade has yet to be made. However, whispers of who the seller might be are already circulating.
Right now, suspicions are squarely directed towards The Capital Group. As reported by The Australian, the fund manager had engaged JPMorgan — the only book-runner in this $1.9 billion transaction — to exit $1.1 billion worth of Fortescue shares in June, which was also carried out at a discount.
There aren't many others who would fit the description. Looking at the shareholder register, Emichrome is the only other institutional investor holding around $1.9 billion.
The sale follows Fortescue's abrupt de-prioritisation of its green hydrogen dream. As James Mickleboro reported, the iron ore company announced major reduction measures on 18 July. As part of the move, Fortescue will be making roughly 700 roles redundant as it tries to stay 'lean and agile'.
Following this news, analysts at Macquarie indicated there could be ramifications among ESG-focused investors. By ratcheting down green hydrogen targets, Macquarie's analysts believe it may prompt a move-out, stating:
ETFs seeking hydrogen exposure, or 'long onlys' with strong energy transition mandates may seek to reduce positions on these developments and a slowing of Fortescue's external green energy business trajectory.
At the same time, the company's core revenue and earnings have stagnated over the last couple of years.
Iron ore keeping Fortescue share price in the dirt
Fortescue's main business line, iron ore, has flatlined recently.
It's not surprising after a quick glance at iron ore prices. The price of the steel-making commodity is basically unchanged compared to a year ago and only roughly 16% higher than five years ago.
Earnings drive a company's share price in the long run. For Fortescue, earnings growth hasn't manifested in recent years due to the softening commodity price. Likewise, the path ahead is hazy given China's current stagnation in the economy.
