The recent AU$154m market cap decrease is likely to have disappointed insiders invested in Lovisa Holdings Limited (ASX:LOV)

Key Insights

• Insiders appear to have a vested interest in Lovisa Holdings' growth, as seen by their sizeable ownership
• The top 7 shareholders own 51% of the company
• Institutions own 12% of Lovisa Holdings

To get a sense of who is truly in control of Lovisa Holdings Limited (ASX:LOV), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 43% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 4.3% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of Lovisa Holdings, beginning with the chart below.

See our latest analysis for Lovisa Holdings

What Does The Institutional Ownership Tell Us About Lovisa Holdings?

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.

Lovisa Holdings already has institutions on the share registry. Indeed, they own a respectable stake in 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Lovisa Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Lovisa Holdings is not owned by hedge funds. Brett Blundy is currently the company's largest shareholder with 39% of shares outstanding. ECP Asset Management Pty Ltd is the second largest shareholder owning 4.4% of common stock, and The Vanguard Group, Inc. holds about 2.2% of the company stock. In addition, we found that Victor Herrero Amigo, the CEO has 2.0% of the shares allocated to their name.

We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of Lovisa Holdings Limited. It is very interesting to see that insiders have a meaningful AU$1.5b stake in this AU$3.4b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 43% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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.

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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.