Institutional investors may overlook Limbach Holdings, Inc.'s (NASDAQ:LMB) recent US$51m market cap drop as long-term gains remain positive

Key Insights

• Significantly high institutional ownership implies Limbach Holdings' stock price is sensitive to their trading actions
• The top 14 shareholders own 50% of the company
• Insiders have been buying lately

To get a sense of who is truly in control of Limbach Holdings, Inc. (NASDAQ:LMB), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 77% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 5.6% in value last week. However, the 174% one-year return to shareholders might have softened the blow. We would assume however, that they would be on the lookout for weakness in the future.

In the chart below, we zoom in on the different ownership groups of Limbach Holdings.

Check out our latest analysis for Limbach Holdings

What Does The Institutional Ownership Tell Us About Limbach Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Limbach Holdings. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Limbach Holdings' earnings history below. Of course, the future is what really matters.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Limbach Holdings. BlackRock, Inc. is currently the company's largest shareholder with 8.6% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 5.1% of common stock, and First Trust Advisors LP holds about 4.9% of the company stock. Additionally, the company's CEO Michael McCann directly holds 1.2% of the total shares outstanding.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Limbach Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Shareholders would probably be interested to learn that insiders own shares in Limbach Holdings, Inc.. It has a market capitalization of just US$914m, and insiders have US$79m 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

The general public, who are usually individual investors, hold a 12% stake in Limbach Holdings. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Limbach Holdings better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Limbach Holdings 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.