Significant control over Lufax Holding by public companies implies that the general public has more power to influence management and governance-related decisions
A total of 2 investors have a majority stake in the company with 68% ownership
To get a sense of who is truly in control of Lufax Holding Ltd (NYSE:LU), it is important to understand the ownership structure of the business. With 41% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, public companies collectively scored the highest last week as the company hit US$1.7b market cap following a 13% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about Lufax Holding.
What Does The Institutional Ownership Tell Us About Lufax Holding?
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 Lufax Holding. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Lufax Holding's earnings history below. Of course, the future is what really matters.
NYSE:LU Earnings and Revenue Growth July 16th 2024
Hedge funds don't have many shares in Lufax Holding. Ping An Insurance (Group) Company of China, Ltd. is currently the company's largest shareholder with 41% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 27% and 2.1%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Lufax Holding
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.
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.
We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.
General Public Ownership
The general public, who are usually individual investors, hold a 14% stake in Lufax Holding. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Company Ownership
We can see that Private Companies own 27%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Public Company Ownership
We can see that public companies hold 41% of the Lufax Holding shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Lufax Holding better, we need to consider many other factors. For example, we've discovered 1 warning sign for Lufax Holding that you should be aware of before investing here.
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.
