In the wake of Liberty Latin America Ltd.’s (NASDAQ:LILA) latest US$83m market cap drop, institutional owners may be forced to take severe actions

To get a sense of who is really in control of Liberty Latin America Ltd. (NASDAQ:LILA), it is important to understand the company’s ownership structure. The group with the most shares in the company, around 60%, are institutions. In other words, the group is exposed to maximum upside (or downside risk).

As a result, institutional investors suffered their heaviest losses last week after the market cap fell $83 million. The recent loss, which adds to a 17% one-year loss for shareholders, may not sit well with this group of investors. Institutions or “liquidity providers” control large sums of money and therefore these types of investors usually have a large influence on stock price movements. Therefore, if the downtrend continues, institutions could come under pressure to sell Liberty Latin America, which could have a negative impact on individual investors.

Let’s dive deeper into each of Liberty Latin America’s ownership types, starting with the table below.

Check out our latest analysis for Liberty Latin America

What Does Institutional Ownership Tell Us About Liberty Latin America?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they’re often more excited about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially as they grow.

Liberty Latin America already has institutions on its 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 Liberty Latin America’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 7.8% of Liberty Latin America. This is interesting because hedge funds can be very active and active. Many are looking for medium-term catalysts that will boost stock prices. Our data shows that BlackRock, Inc. is the largest shareholder with 9.2% of outstanding shares. For comparison, the second-largest shareholder holds about 7.8% of the outstanding shares, followed by a 6.6% stake from the third-largest shareholder. In addition, CEO Balan Nair owns 0.9% of the company’s shares.

After digging further, we found that the top 12 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. Quite a few analysts cover the stock, so you can easily look at the projected growth.

Insider property of Liberty Latin America

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. 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 insiders buying shares in Liberty Latin America Ltd. own. It’s a fairly large company, so seeing a potentially meaningful direction is generally positive. In this case, they own around $191 million worth of stock (at current prices). It’s good to see how much is being invested by insiders. You can check if these insiders have bought recently here.

General Public Property

The general public, who are typically individual investors, own a 14% stake in Liberty Latin America. While this group may not necessarily be in charge, it certainly can have a real impact on how the company is run.

Private Equity Ownership

Private equity firms hold a 6.6% stake in Liberty Latin America. This indicates that they can influence important political decisions. This might encourage some investors, as private equity is sometimes able to promote strategies that help the market see the value of the company. Alternatively, these holders could exit the investment after listing it publicly.

Next Steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important.

Many find it useful take a deep look at how a company has performed in the past. You can access it detailed graphics of past earnings, receipts and cash flows.

If you’d rather learn what analysts are predicting for future growth, don’t miss this one free Analyst forecast report.

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.

Do you have any feedback about this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.

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.