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A look at the shareholders of Lucapa Diamond Company Limited (ASX:LOM) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.
Lucapa Diamond is not a large company by global standards. It has a market capitalization of AU$106.5m, which means it wouldn’t have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions don’t own many shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about LOM.
See our latest analysis for Lucapa Diamond
What Does The Institutional Ownership Tell Us About Lucapa Diamond?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
Institutions own less than 5% of Lucapa Diamond. That indicates that the company is on the radar of some funds, but it isn’t particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it’s the future that counts most.
We note that hedge funds don’t have a meaningful investment in Lucapa Diamond. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.
Insider Ownership Of Lucapa Diamond
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board; and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board, themselves.
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 information suggests that insiders maintain a significant holding in Lucapa Diamond Company Limited. Insiders have a AU$16.9m stake in this AU$106.5m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.