Is LleidaNetworks Serveis Telemàtics, S.A. (BME:LLN) Popular Amongst Insiders?

By
Simply Wall St
Published
December 09, 2020

A look at the shareholders of LleidaNetworks Serveis Telemàtics, S.A. (BME:LLN) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

LleidaNetworks Serveis Telemàtics is a smaller company with a market capitalization of €106m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about LleidaNetworks Serveis Telemàtics.

Check out our latest analysis for LleidaNetworks Serveis Telemàtics

BME:LLN Ownership Breakdown December 9th 2020

What Does The Institutional Ownership Tell Us About LleidaNetworks Serveis Telemàtics?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that LleidaNetworks Serveis Telemàtics does have institutional investors; and they hold a good portion of the company's stock. 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 LleidaNetworks Serveis Telemàtics' historic earnings and revenue below, but keep in mind there's always more to the story.

BME:LLN Earnings and Revenue Growth December 9th 2020

LleidaNetworks Serveis Telemàtics is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Francisco José Sapena Soler with 43% of shares outstanding. The second and third largest shareholders are Empresa Nacional de Innovación, SME, S.A. and Santander Asset Management, S.A., S.G.I.I.C., with an equal amount of shares to their name at 7.4%.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of LleidaNetworks Serveis Telemàtics

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders maintain a significant holding in LleidaNetworks Serveis Telemàtics, S.A.. Insiders have a €45m stake in this €106m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public holds a 31% stake in LleidaNetworks Serveis Telemàtics. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 7.4% stake in LleidaNetworks Serveis Telemàtics. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

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. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for LleidaNetworks Serveis Telemàtics 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. 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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