The large shareholder groups of Lufax Holding Ltd (NYSE:LU) have power over the company. Institutions often own shares in more established companies, while it is not uncommon to see insiders owning a good number of smaller companies. We also tend to see a decline in insider participation in companies that were previously public.
Lufax Holding has a market cap of US$12 billion, so it’s too big to fly under the radar. We expect institutions and retail investors to own part of the business. Looking at our ownership group data (below), it appears that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Lufax Holding.
What does institutional ownership tell us about Lufax Holding?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.
We can see that Lufax Holding has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. It is therefore worth checking out the earnings history of Lufax Holding below. Of course, the future is what really matters.
Hedge funds do not have many shares in Lufax Holding. Tun Kung Company Limited is currently the largest shareholder, with 27% of the outstanding shares. In comparison, the second and third shareholders hold around 23% and 15% of the shares.
To make our study more interesting, we found that the top 2 shareholders hold a majority stake in the company, which means they are powerful enough to influence company decisions.
Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are plenty of analysts covering the stock, so it might be interesting to see what they are predicting as well.
Insider ownership of Lufax Holding
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.
Our information suggests that insiders of Lufax Holding Ltd own less than 1% of the company. We note, however, that insiders may have an indirect interest through a private company or other corporate structure. As this is a large company, we expect insiders to own only a small percentage. But it’s worth noting that they own $96 million worth of stock. It’s good to see board members owning stock, but it can be helpful to check whether those insiders have bought.
General public property
The general public, including retail investors, owns 20% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
Private Company Ownership
We can see that private companies hold 27% of the issued shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this must be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Ownership of a public company
State-owned companies currently own 23% of Lufax Holding’s shares. It’s hard to say for sure, but it suggests they have intertwined business interests. This could be a strategic stake, so it’s worth monitoring this space for ownership changes.
While it is worth considering the different groups that own a business, there are other, even more important factors. Take risks for example – Lufax Holding has 2 warning signs (and 1 which is potentially serious) that we think you should know about.
Ultimately the future is the most important. You can access this free analyst forecast report for the company.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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