Key findings

• Significantly high institutional ownership implies that Lemon Tree Hotels’ share price is sensitive to their trading activities
• The top 5 shareholders own 53% of the company
• Data from analyst forecasts and owner research can help better estimate a company’s future performance

If you want to know who really controls Lemon Tree Hotels Limited (NSE:LEMONTREE), you have to look at the composition of its share registry. And the group that holds the biggest piece of the pie is institutions, with 49%. That means the group benefits the most when the stock rises (or loses the most when there is a downturn).

No shareholder likes to lose money on their investments, especially institutional investors, whose shares fell 5.8% last week. The 46% gain in one year may have mitigated their overall losses. But they are likely cautious about future losses.

Let’s dive deeper into each Lemon Tree Hotels ownership type, starting with the table below.

Check out our latest analysis for Lemon Tree Hotels

What does institutional ownership tell us about Lemon Tree Hotels?

Institutional investors often compare their own returns to those of a commonly followed index, so they typically consider buying larger companies included in the relevant benchmark index.

We can see that Lemon Tree Hotels has institutional investors; and they hold a good portion of the company’s shares. This suggests some credibility among professional investors. But we cannot rely on this fact alone, as institutions make bad investments sometimes, just like everyone else does. It is not uncommon to see a large share price drop when two large institutional investors try to sell a stock at the same time, so it is worth checking Lemon Tree Hotels’ past earnings history (below). Of course, remember that there are other factors to consider as well.

We note that hedge funds do not have any significant investments in Lemon Tree Hotels. Spank Management Services Private Limited is currently the largest shareholder with 22% of the outstanding shares. Stichting Pensioenfonds ABP is the second largest shareholder with 15% of the common shares and SBI Funds Management Limited holds about 7.4% of the company shares.

To make our study even more interesting, we found that the top five shareholders control more than half of the company, meaning that this group has significant influence on the company’s decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you can look at forecasted growth quite easily.

Insider ownership of Lemon Tree Hotels

The definition of an insider may vary slightly from country to country, but it always includes members of the board of directors. Company management runs the business, but the CEO is responsible to the board, even if he or she is a member of the board.

I think insider ownership is generally a good thing. However, in some cases it makes it harder for other shareholders to hold the board accountable for decisions.

Our data suggests that insiders own less than 1% of Lemon Tree Hotels Limited in their own names. But they could have indirect interests through a corporate structure we haven’t detected. It’s a large company, so even small stakes can lead to alignment between board and shareholders. In this case, insiders own Rp 400 million worth of shares. It’s good to see board members own shares, but it might be worth checking whether those insiders have been buying.

Public property

The general public, usually retail investors, holds a 24% stake in Lemon Tree Hotels. While this size of ownership is significant, it may not be enough to change company policy if the decision does not coincide with that of other major shareholders.

Private company ownership

It appears that private companies own 27% of Lemon Tree Hotels shares. This might be worth investigating further. If related parties, such as insiders, have an interest in one of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is worth considering the different groups that own a business, there are other factors that are even more important. Note that Lemon Tree Hotels 1 warning signal in our investment analysis you should know about…

But ultimately It is the futurenot the past, will determine how well the owners of this company will perform, so we think it wise to take a look at this free report showing whether analysts are predicting a better future.

NB: The figures in this article are calculated using the last twelve months’ data, which refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the annual report.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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