The big shareholder groups in Dr. Lal PathLabs Limited (NSE:LALPATHLAB) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.’

Dr. Lal PathLabs isn’t enormous, but it’s not particularly small either. It has a market capitalization of ₹89b, which means it would generally expect to see some institutions on the share registry. In the chart below below, we can see that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholder can tell us about LALPATHLAB.

See our latest analysis for Dr. Lal PathLabs

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What Does The Institutional Ownership Tell Us About Dr. Lal PathLabs?

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.

We can see that Dr. Lal PathLabs does have institutional investors; and they hold 18% of the stock. 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Dr. Lal PathLabs’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

We note that hedge funds don’t have a meaningful investment in Dr. Lal PathLabs. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Dr. Lal PathLabs

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.