Linamar Corporation's (TSE:LNR) stock price dropped 5.0% last week; individual investors would not be happy

Key Insights

• Significant control over Linamar by individual investors implies that the general public has more power to influence management and governance-related decisions
• A total of 16 investors have a majority stake in the company with 50% ownership
• Recent sales by insiders

To get a sense of who is truly in control of Linamar Corporation (TSE:LNR), it is important to understand the ownership structure of the business. With 44% stake, individual investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 5.0% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 34% stock also took a hit.

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

Check out our latest analysis for Linamar

What Does The Institutional Ownership Tell Us About Linamar?

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 Linamar. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Linamar's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Linamar. Looking at our data, we can see that the largest shareholder is the CEO Linda Hasenfratz with 33% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.5% and 2.5%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 16 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Linamar

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.

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.

It seems insiders own a significant proportion of Linamar Corporation. It has a market capitalization of just CA$4.1b, and insiders have CA$1.4b worth of shares in their own names. That's quite significant. 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

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Linamar. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Take risks for example - Linamar has 1 warning sign we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.