Painful week for public companies invested in LIC Housing Finance Limited (NSE:LICHSGFIN) after 5.8% drop, institutions also suffered losses

Key Insights

• Significant control over LIC Housing Finance by public companies implies that the general public has more power to influence management and governance-related decisions
• 52% of the business is held by the top 3 shareholders
• Institutions own 36% of LIC Housing Finance

If you want to know who really controls LIC Housing Finance Limited (NSE:LICHSGFIN), then you'll have to look at the makeup of its share registry. With 45% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 5.8% decrease in the stock price last week, public companies suffered the most losses, but institutions who own 36% stock also took a hit.

Let's take a closer look to see what the different types of shareholders can tell us about LIC Housing Finance.

View our latest analysis for LIC Housing Finance

What Does The Institutional Ownership Tell Us About LIC Housing Finance?

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.

We can see that LIC Housing Finance does have institutional investors; and they hold a good portion of the company's stock. 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. 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 LIC Housing Finance's earnings history below. Of course, the future is what really matters.

LIC Housing Finance is not owned by hedge funds. The company's largest shareholder is Life Insurance Corporation of India, with ownership of 45%. With 3.9% and 3.3% of the shares outstanding respectively, Kotak Mahindra Asset Management Company Limited and Mirae Asset Global Investments Co., Ltd. are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of LIC Housing Finance

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

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over LIC Housing Finance. 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.

Public Company Ownership

It appears to us that public companies own 45% of LIC Housing Finance. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand LIC Housing Finance better, we need to consider many other factors. For example, we've discovered 2 warning signs for LIC Housing Finance (1 shouldn't be ignored!) that you should be aware of before investing here.

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.