The Lion Electric Company's (TSE:LEV) last week's 11% decline must have disappointed retail investors who have a significant stake
- Lion Electric's significant retail investors 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 52% ownership
- Insider ownership in Lion Electric is 13%
If you want to know who really controls The Lion Electric Company (TSE:LEV), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are retail investors with 42% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And following last week's 11% decline in share price, retail investors suffered the most losses.
Let's delve deeper into each type of owner of Lion Electric, beginning with the chart below.
View our latest analysis for Lion Electric
What Does The Institutional Ownership Tell Us About Lion Electric?
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.
Lion Electric already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Lion Electric's historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in Lion Electric. Desmarais Family Residuary Trust is currently the largest shareholder, with 35% of shares outstanding. Marc Bedard is the second largest shareholder owning 12% of common stock, and XPND Fund, L.P. holds about 2.4% of the company stock. Marc Bedard, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Lion Electric
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 a reasonable proportion of The Lion Electric Company. Insiders own CA$73m worth of shares in the CA$584m company. 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-- including retail investors -- own 42% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
Our data indicates that Private Companies hold 35%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
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. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Lion Electric (of which 1 can't be ignored!) you should know about.
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.
The Lion Electric Company designs, develops, manufactures, and distributes purpose-built all-electric medium and heavy-duty urban vehicles in North America.
Reasonable growth potential with mediocre balance sheet.