Institutional investors may adopt severe steps after LendingClub Corporation’s (NYSE:LC) latest 6.2% drop adds to a year losses

Important Findings

• Significantly high institutional ownership implies that LendingClub’s stock price is sensitive to their trading activity
• 51% of the company is held by the 13 largest shareholders
• Owner research along with forecast data from analysts help better understand a stock’s opportunities

Every LendingClub Corporation (NYSE:LC) investor should be aware of the most powerful shareholder groups. The group with the most shares in the company, around 78%, are institutions. That is, the group will benefit most when the stock goes up (or lose most when it goes down).

And institutional investors suffered the heaviest losses after the company’s share price fell 6.2% last week. Needless to say, the recent loss, which further adds to shareholders’ 43% one-year loss, may not go down well with this particular category of shareholders. Institutions, often referred to as “market makers,” wield significant power in influencing the price momentum of any stock. Therefore, should LendingClub’s share price continue to be weak, institutional investors may feel compelled to sell the stock, which may not be ideal for retail investors.

Let’s dive deeper into each LendingClub owner type, starting with the table below.

Check out our latest analysis for LendingClub

What Does Institutional Ownership Tell Us About LendingClub?

Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are included in major indices.

LendingClub already has institutions on the share register. In fact, they own a respectable stake in the company. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. If several institutes change their opinion on a stock at the same time, the share price could fall quickly. It is therefore worth checking out LendingClub’s winning history below. Of course, what really matters is the future.

Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. Our data shows that hedge funds own 5.5% of LendingClub. This catches my attention because hedge funds sometimes try to influence management or enact changes that create value for shareholders in the short term. Vanguard Group, Inc. is currently the company’s largest shareholder with 13% of outstanding shares. BlackRock, Inc. and Jackson Square Partners, LLC are the second and third largest shareholders with 7.7% and 7.4% of the outstanding shares, respectively. Additionally, we found that Scott Sanborn, the CEO, has allocated 1.1% of the stock to his name.

After digging further, we found that the top 13 collectively own 51% of the company, suggesting that no single shareholder has significant control over the company.

While examining a company’s institutional ownership can add value to your research, it’s also a good practice to research analyst recommendations to gain a deeper understanding of a stock’s expected performance. There are many analysts covering the stock, so it might be worth seeing what they’re forecasting as well.

Insider ownership of LendingClub

The definition of corporate insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management runs the business, but the CEO is accountable to the board even if he or she is a member.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

We can see that insiders own shares of LendingClub Corporation. It has a market cap of just $944 million, and insiders have $25 million worth of shares in their own names. It’s good to see some insider investments, but it might be worth checking to see if those insiders bought.

General Public Property

The general public — including retail investors — own 14% of the company, so it can’t be ignored. While this ownership may not be sufficient to sway a policy decision in their favor, they can still collectively influence company policy.

Next Steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Case in point: We discovered it 2 warning signs for LendingClub You should be aware of this, and one of them is worrying.

But ultimately it is the future, not the past that determines how well the owners of this business will do. Therefore, we think it’s wise to take a look at this free report that shows whether analysts are predicting a brighter future.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

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This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.