Public companies in LG Innotek Co., Ltd. (KRX:011070) are its biggest bettors, and their bets paid off as stock gained 4.1% 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
• The top 3 shareholders own 52% of the company
• 20% of LG Innotek is held by Institutions

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Every investor in LG Innotek Co., Ltd. (KRX:011070) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 41% to be precise, is public companies. 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 ₩182b last week.

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

Check out our latest analysis for LG Innotek

What Does The Institutional Ownership Tell Us About LG Innotek?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

LG Innotek already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 LG Innotek'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 LG Innotek. Looking at our data, we can see that the largest shareholder is LG Electronics Inc. with 41% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.4% and 2.4%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 LG Innotek

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of LG Innotek Co., Ltd. in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own ₩706m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 40% stake in 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

It appears to us that public companies own 41% of LG Innotek. 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. Case in point: We've spotted 1 warning sign for LG Innotek you should be aware of.

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.