Key Insights
- LGI's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
- A total of 4 investors have a majority stake in the company with 51% ownership
- 25% of LGI is held by insiders
A look at the shareholders of LGI Limited (ASX:LGI) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Individual insiders, on the other hand, account for 25% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
Let's take a closer look to see what the different types of shareholders can tell us about LGI.
See our latest analysis for LGI
What Does The Institutional Ownership Tell Us About LGI?
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 LGI 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of LGI, (below). Of course, keep in mind that there are other factors to consider, too.
LGI is not owned by hedge funds. Blakin Technologies Pty Ltd is currently the company's largest shareholder with 19% of shares outstanding. With 15% and 9.5% of the shares outstanding respectively, Timothy McGavin and Picarra Holdings Pty Ltd are the second and third largest shareholders.
To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of LGI
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.
Our information suggests that insiders maintain a significant holding in LGI Limited. It has a market capitalization of just AU$266m, and insiders have AU$66m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over LGI. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
Our data indicates that Private Companies hold 33%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Public Company Ownership
Public companies currently own 5.0% of LGI stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand LGI better, we need to consider many other factors. Take risks for example - LGI has 1 warning sign we think you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
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