Public companies are LG Innotek Co., Ltd.'s (KRX:011070) biggest owners and were rewarded after market cap rose by ₩310b last week

Key Insights

• Significant control over LG Innotek by public companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 3 shareholders
• Institutions own 23% of LG Innotek

To get a sense of who is truly in control of LG Innotek Co., Ltd. (KRX:011070), it is important to understand the ownership structure of the business. With 41% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, public companies benefitted the most after the company's market cap rose by ₩310b last week.

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

View our latest analysis for LG Innotek

What Does The Institutional Ownership Tell Us About LG Innotek?

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.

As you can see, institutional investors have a fair amount of stake in LG Innotek. 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 LG Innotek, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in LG Innotek. Our data shows that LG Electronics Inc. is the largest shareholder with 41% of shares outstanding. National Pension Service is the second largest shareholder owning 8.4% of common stock, and The Vanguard Group, Inc. holds about 2.3% of the company stock.

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.

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

Insider Ownership Of LG Innotek

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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 data suggests that insiders own under 1% of LG Innotek Co., Ltd. in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around ₩491m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 36% ownership, the general public, mostly comprising of individual investors, have some degree of sway over LG Innotek. 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.

Public Company Ownership

Public companies currently own 41% of LG Innotek stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand LG Innotek better, we need to consider many other factors. Take risks for example - LG Innotek has 1 warning sign we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.