Lemonade, Inc.'s (NYSE:LMND) large institutional owners must be happy as stock continues to impress, up 11% over the past week

Key Insights

• Significantly high institutional ownership implies Lemonade's stock price is sensitive to their trading actions
• A total of 18 investors have a majority stake in the company with 51% ownership
• Insiders have sold recently

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If you want to know who really controls Lemonade, Inc. (NYSE:LMND), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 63% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And things are looking up for institutional investors after the company gained US$614m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 121%.

Let's delve deeper into each type of owner of Lemonade, beginning with the chart below.

See our latest analysis for Lemonade

What Does The Institutional Ownership Tell Us About Lemonade?

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.

Lemonade already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Lemonade's historic earnings and revenue below, but keep in mind there's always more to the story.

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Lemonade is not owned by hedge funds. The Vanguard Group, Inc. is currently the company's largest shareholder with 8.4% of shares outstanding. In comparison, the second and third largest shareholders hold about 6.0% and 4.8% of the stock.

A closer look at our ownership figures suggests that the top 18 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Lemonade

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 can report that insiders do own shares in Lemonade, Inc.. The insiders have a meaningful stake worth US$314m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 29% stake in Lemonade. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lemonade better, we need to consider many other factors. For instance, we've identified 2 warning signs for Lemonade that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.