After the recent decline, Le Merite Exports Limited (NSE:LEMERITE) Co-Chief Executive Officer Abhishek Lath's holdings have lost 10% of their value

Key Insights

• Le Merite Exports' significant insider ownership suggests inherent interests in company's expansion
• 59% of the business is held by the top 2 shareholders
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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A look at the shareholders of Le Merite Exports Limited (NSE:LEMERITE) can tell us which group is most powerful. The group holding the most number of shares in the company, around 62% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, insiders as a group endured the highest losses after market cap fell by ₹1.2b.

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

View our latest analysis for Le Merite Exports

What Does The Lack Of Institutional Ownership Tell Us About Le Merite Exports?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Le Merite Exports might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Le Merite Exports. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Le Merite Exports' case, its Co-Chief Executive Officer, Abhishek Lath, is the largest shareholder, holding 49% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 3.5% by the third-largest shareholder. Note that two of the top three shareholders are also Co-Chief Executive Officer and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 59% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Le Merite Exports

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.

Our information suggests that insiders own more than half of Le Merite Exports Limited. This gives them effective control of the company. So they have a ₹6.8b stake in this ₹11b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 38% stake in the company, and hence can't easily be ignored. 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 Le Merite Exports better, we need to consider many other factors. For instance, we've identified 1 warning sign for Le Merite Exports that you should be aware of.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.