Could The Lloyds Banking Group plc (LON:LLOY) Ownership Structure Tell Us Something Useful?

A look at the shareholders of Lloyds Banking Group plc (LON:LLOY) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. We also tend to see lower insider ownership in companies that were previously publicly owned.

Lloyds Banking Group is a pretty big company. It has a market capitalization of UK£40b. Normally institutions would own a significant portion of a company this size. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Lloyds Banking Group.

View our latest analysis for Lloyds Banking Group

LSE:LLOY Ownership Summary, January 29th 2020
LSE:LLOY Ownership Summary, January 29th 2020

What Does The Institutional Ownership Tell Us About Lloyds Banking Group?

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.

Lloyds Banking Group already has institutions on the share registry. Indeed, they own 85% of the company. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. 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 Lloyds Banking Group, (below). Of course, keep in mind that there are other factors to consider, too.

LSE:LLOY Income Statement, January 29th 2020
LSE:LLOY Income Statement, January 29th 2020

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Lloyds Banking Group is not owned by hedge funds. The company’s largest shareholder is BlackRock, Inc., with ownership of 6.2%, The second and third largest shareholders are Harris Associates L.P. and The Vanguard Group, Inc., each holding around 3.7% of the shares outstanding.

A deeper look at our ownership data shows that the top 22 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Lloyds Banking Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 most recent data indicates that insiders own less than 1% of Lloyds Banking Group plc. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own UK£38m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 14% stake in LLOY. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Lloyds Banking Group is showing 4 warning signs in our investment analysis , you should know about…

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.