A look at the shareholders of Literacy Capital plc (LON:BOOK) can tell us which group is most powerful. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, insiders were the biggest beneficiaries of last week’s 10% gain.
Let's delve deeper into each type of owner of Literacy Capital, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Literacy Capital?
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.
Literacy Capital already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Literacy Capital, (below). Of course, keep in mind that there are other factors to consider, too.
LSE:BOOK Earnings and Revenue Growth July 29th 2023
We note that hedge funds don't have a meaningful investment in Literacy Capital. From our data, we infer that the largest shareholder is Paul R. Pindar (who also holds the title of Top Key Executive) with 28% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Meanwhile, the second and third largest shareholders, hold 11% and 7.3%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Richard Pindar is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.
On looking further, we found that 52% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Literacy Capital
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own the majority of Literacy Capital plc. This means they can collectively make decisions for the company. That means they own UK£205m worth of shares in the UK£296m company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
With a 10% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Literacy Capital. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
It seems that Private Companies own 4.0%, of the Literacy Capital stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Literacy Capital better, we need to consider many other factors. For instance, we've identified 2 warning signs for Literacy Capital that you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist of interesting companies.
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.
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