Life Healthcare Group Holdings Limited's (JSE:LHC) one-year returns climbed after last week's 3.3% gain, institutional investors must be happy

Key Insights

• Given the large stake in the stock by institutions, Life Healthcare Group Holdings' stock price might be vulnerable to their trading decisions
• A total of 5 investors have a majority stake in the company with 53% ownership
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls Life Healthcare Group Holdings Limited (JSE:LHC), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 52% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 3.3% last week. The one-year return on investment is currently 6.3% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Life Healthcare Group Holdings.

See our latest analysis for Life Healthcare Group Holdings

What Does The Institutional Ownership Tell Us About Life Healthcare Group Holdings?

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.

As you can see, institutional investors have a fair amount of stake in Life Healthcare Group Holdings. 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 Life Healthcare Group 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 Life Healthcare Group Holdings. Our data shows that Public Investment Corporation Limited is the largest shareholder with 23% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 13% and 6.7%, of the shares outstanding, respectively.

On looking further, we found that 53% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Life Healthcare Group Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 information suggests that Life Healthcare Group Holdings Limited insiders own under 1% of the company. Keep in mind that it's a big company, and the insiders own R82m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 17% stake in Life Healthcare Group Holdings. 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.

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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Life Healthcare Group Holdings , and understanding them should be part of your investment process.

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.