With a 47% stake in Lemon Tree Hotels Limited (NSE: LEMONTREE), institutional investors have a lot to do with the company
Every investor in Lemon Tree Hotels Limited (NSE: LEMONTREE) should know the most powerful shareholder groups. We can see that institutions hold the lion’s share of the business with 47% ownership. In other words, the group faces the maximum upside potential (or downside risk).
And as a result, institutional investors reaped the most rewards after the company’s stock price gained 10% last week. The one-year ROI is currently at 26% and last week’s gain would have been more than welcome.
Let’s take a closer look at what different types of shareholders can tell us about Lemon Tree Hotels.
Check out our latest review of Lemon Tree Hotels
What Does Institutional Ownership Tell Us About Lemon Tree Hotels?
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.
Lemon Tree Hotels already has institutions registered in the share register. Indeed, they hold a respectable stake in the company. This may indicate that the company has some degree of credibility in the investment community. However, it is best to be wary of relying on the so-called validation that accompanies institutional investors. They are also sometimes wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Lemon Tree Hotels’ historical revenue and earnings below, but keep in mind there’s always more to tell.
We note that hedge funds have no significant investment in Lemon Tree Hotels. Spank Management Services Private Limited is currently the company’s largest shareholder with 25% of the shares outstanding. Meanwhile, the second and third largest shareholders hold 15% and 8.6% of the outstanding shares respectively.
Our research also shed light on the fact that approximately 55% of the company is controlled by the 4 major shareholders, suggesting that these owners wield significant influence over the company.
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 a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.
Insider Ownership of Lemon Tree Hotels
The definition of an insider may differ slightly from country to country, but board members still matter. 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.
I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.
Shareholders would probably be interested to learn that insiders hold shares in Lemon Tree Hotels Limited. Its market capitalization is only ₹41 billion and insiders hold ₹452 million of shares, in their own name. This shows at least some alignment. You can click here to see if these insiders have been buying or selling.
General public property
The general public, including retail investors, owns 22% of the company’s capital and therefore cannot be easily ignored. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.
Private Company Ownership
It seems that private companies own 31% of the shares of Lemon Tree Hotels. It’s hard to draw conclusions from this fact alone, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in shares of a public company through a separate private company.
It is always useful to think about the different groups that own shares in a company. But to better understand Lemon Tree Hotels, we need to consider many other factors.
I like to dive deeper on the performance of a company in the past. You can find Earnings and Earnings History in this detailed graph.
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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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.