Lotte Wellfood Co.,Ltd (KRX:280360) surges 6.6%; public companies who own 51% shares profited along with institutions

Key Insights

• The considerable ownership by public companies in Lotte WellfoodLtd indicates that they collectively have a greater say in management and business strategy
• 51% of the company is held by a single shareholder (LOTTE Corporation)
• Institutional ownership in Lotte WellfoodLtd is 18%

To get a sense of who is truly in control of Lotte Wellfood Co.,Ltd (KRX:280360), it is important to understand the ownership structure of the business. We can see that public companies own the lion's share in the company with 51% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Public companies gained the most after market cap touched ₩1.3t last week, while institutions who own 18% also benefitted.

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

View our latest analysis for Lotte WellfoodLtd

What Does The Institutional Ownership Tell Us About Lotte WellfoodLtd?

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 Lotte WellfoodLtd 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Lotte WellfoodLtd, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Lotte WellfoodLtd. The company's largest shareholder is LOTTE Corporation, with ownership of 51%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Lotte Aluminium Co., Ltd. is the second largest shareholder owning 7.3% of common stock, and National Pension Service holds about 6.5% of the company stock.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Lotte WellfoodLtd

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

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.

Shareholders would probably be interested to learn that insiders own shares in Lotte Wellfood Co.,Ltd. It has a market capitalization of just ₩1.3t, and insiders have ₩64b worth of shares, in their own names. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 13% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lotte WellfoodLtd. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 14%, of the Lotte WellfoodLtd stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Public Company Ownership

We can see that public companies hold 51% of the Lotte WellfoodLtd shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

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. To that end, you should be aware of the 1 warning sign we've spotted with Lotte WellfoodLtd .

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.