Institutional investors may adopt severe steps after LSI Industries Inc.'s (NASDAQ:LYTS) latest 9.7% drop adds to a year losses

Key Insights

• Institutions' substantial holdings in LSI Industries implies that they have significant influence over the company's share price
• A total of 12 investors have a majority stake in the company with 50% ownership
• Recent sales by insiders

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A look at the shareholders of LSI Industries Inc. (NASDAQ:LYTS) can tell us which group is most powerful. With 78% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 9.7% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 13% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell LSI Industries, which might have negative implications on individual investors.

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

Check out our latest analysis for LSI Industries

What Does The Institutional Ownership Tell Us About LSI Industries?

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.

We can see that LSI Industries 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. 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 LSI Industries, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Our data indicates that hedge funds own 5.5% of LSI Industries. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Systematic Financial Management LP is currently the largest shareholder, with 8.5% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.5% and 5.5%, of the shares outstanding, respectively. Furthermore, CEO James Clark is the owner of 1.2% of the company's shares.

A closer look at our ownership figures suggests that the top 12 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of LSI Industries

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.

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.

Shareholders would probably be interested to learn that insiders own shares in LSI Industries Inc.. As individuals, the insiders collectively own US$28m worth of the US$519m company. 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 11% stake in LSI Industries. 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:

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 LSI Industries .

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.