Literacy Capital plc's (LON:BOOK) Top Key Executive Paul R. Pindar is the most upbeat insider, and their holdings increased by 10% last week

Key Insights

• Insiders appear to have a vested interest in Literacy Capital's growth, as seen by their sizeable ownership
• 52% of the business is held by the top 4 shareholders
• Institutions own 16% of Literacy Capital

To get a sense of who is truly in control of Literacy Capital plc (LON:BOOK), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders were the biggest beneficiaries of last week’s 10% gain.

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

Check out our latest analysis for Literacy Capital

What Does The Institutional Ownership Tell Us About Literacy Capital?

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.

Literacy Capital 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 Literacy Capital's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Literacy Capital. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Literacy Capital's case, its Top Key Executive, Paul R. Pindar, is the largest shareholder, holding 28% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 7.3% of the stock. Interestingly, the second-largest shareholder, Richard Pindar is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

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.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Literacy Capital

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

Our most recent data indicates that insiders own the majority of Literacy Capital plc. This means they can collectively make decisions for the company. Given it has a market cap of UK£296m, that means they have UK£205m worth of shares. 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 10% 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.

Private Company Ownership

We can see that Private Companies own 4.0%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Literacy Capital better, we need to consider many other factors. Take risks for example - Literacy Capital has 2 warning signs we think you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.