What Percentage Of PJSC LUKOIL (MCX:LKOH) Shares Do Insiders Own?

By
Simply Wall St
Published
January 23, 2022
MISX:LKOH
Source: Shutterstock

Every investor in PJSC LUKOIL (MCX:LKOH) should be aware of the most powerful shareholder groups. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

PJSC LUKOIL has a market capitalization of ₽4.2t, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about PJSC LUKOIL.

View our latest analysis for PJSC LUKOIL

ownership-breakdown
MISX:LKOH Ownership Breakdown January 23rd 2022

What Does The Institutional Ownership Tell Us About PJSC LUKOIL?

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.

We can see that PJSC LUKOIL does have institutional investors; and they hold a good portion of the company's stock. 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 PJSC LUKOIL's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
MISX:LKOH Earnings and Revenue Growth January 23rd 2022

We note that hedge funds don't have a meaningful investment in PJSC LUKOIL. With a 30% stake, CEO Vagit Alekperov is the largest shareholder. In comparison, the second and third largest shareholders hold about 9.3% and 5.8% of the stock.

We did some more digging and found that 6 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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 PJSC LUKOIL

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. 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.

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 information suggests that insiders maintain a significant holding in PJSC LUKOIL. Insiders own ₽1.7t worth of shares in the ₽4.2t company. That's quite meaningful. 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

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over PJSC LUKOIL. 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.

Private Company Ownership

It seems that Private Companies own 5.8%, of the PJSC LUKOIL stock. 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 PJSC LUKOIL better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for PJSC LUKOIL you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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