Is Lovisa Holdings Limited's (ASX:LOV) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
September 24, 2020
ASX:LOV

Every investor in Lovisa Holdings Limited (ASX:LOV) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Lovisa Holdings is a smaller company with a market capitalization of AU$780m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Lovisa Holdings.

Check out our latest analysis for Lovisa Holdings

ownership-breakdown
ASX:LOV Ownership Breakdown September 25th 2020

What Does The Institutional Ownership Tell Us About Lovisa Holdings?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Lovisa Holdings. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Lovisa Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
ASX:LOV Earnings and Revenue Growth September 25th 2020

Lovisa Holdings is not owned by hedge funds. Brett Blundy is currently the largest shareholder, with 40% of shares outstanding. With 8.3% and 6.0% of the shares outstanding respectively, FIL Limited and Challenger Limited are the second and third largest shareholders. Furthermore, CEO Shane Fallscheer is the owner of 5.4% of the company's shares.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Lovisa Holdings

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems insiders own a significant proportion of Lovisa Holdings Limited. It has a market capitalization of just AU$780m, and insiders have AU$371m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public holds a 31% stake in Lovisa Holdings. 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:

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. Case in point: We've spotted 2 warning signs for Lovisa Holdings 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. 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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