Could The Lancaster Colony Corporation (NASDAQ:LANC) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
July 25, 2021
NasdaqGS:LANC
Source: Shutterstock

If you want to know who really controls Lancaster Colony Corporation (NASDAQ:LANC), then you'll have to look at the makeup of its share registry. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. 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.

Lancaster Colony is a pretty big company. It has a market capitalization of US$5.5b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about Lancaster Colony.

View our latest analysis for Lancaster Colony

ownership-breakdown
NasdaqGS:LANC Ownership Breakdown July 25th 2021

What Does The Institutional Ownership Tell Us About Lancaster Colony?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Lancaster Colony already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Lancaster Colony's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:LANC Earnings and Revenue Growth July 25th 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Lancaster Colony. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Lancaster Colony's case, its Top Key Executive, John Gerlach, is the largest shareholder, holding 27% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.4% and 7.4% of the stock.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 Lancaster Colony

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Lancaster Colony Corporation. Insiders own US$1.6b worth of shares in the US$5.5b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public holds a 10% stake in Lancaster Colony. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lancaster Colony better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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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This article by Simply Wall St is general in nature. 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.
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