Retail investors invested in Linamar Corporation (TSE:LNR) copped the brunt of last week's CA$139m market cap decline
Key Insights
The considerable ownership by retail investors in Linamar indicates that they collectively have a greater say in management and business strategy
50% of the business is held by the top 16 shareholders
If you want to know who really controls Linamar Corporation (TSE:LNR), then you'll have to look at the makeup of its share registry. We can see that retail investors own the lion's share in the company with 44% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
While insiders who own 34% came under pressure after market cap dropped to CA$3.9b last week,retail investors took the most losses.
In the chart below, we zoom in on the different ownership groups of Linamar.
View our latest analysis for Linamar
What Does The Institutional Ownership Tell Us About Linamar?
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.
As you can see, institutional investors have a fair amount of stake in Linamar. 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 Linamar's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Linamar. Looking at our data, we can see that the largest shareholder is the CEO Linda Hasenfratz with 33% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.5% and 2.5% of the stock.
A closer look at our ownership figures suggests that the top 16 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
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 Linamar
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
It seems insiders own a significant proportion of Linamar Corporation. Insiders own CA$1.4b worth of shares in the CA$3.9b 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
With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Linamar. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Linamar 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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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.