Yahoo Finance Despite recent sales, Lifeway Foods, Inc. (NASDAQ:LWAY) insiders own 33% shares but recent downturn may have set them back
Key Insights
Insiders appear to have a vested interest in Lifeway Foods' growth, as seen by their sizeable ownership
The top 3 shareholders own 56% of the company
A look at the shareholders of Lifeway Foods, Inc. (NASDAQ:LWAY) can tell us which group is most powerful. With 33% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Even though insiders have sold shares recently, the group owns the most numbers of shares in the company. As market cap fell to US$198m last week, they would have faced the highest losses than any other shareholder groups of the company.
Let's delve deeper into each type of owner of Lifeway Foods, beginning with the chart below.
See our latest analysis for Lifeway Foods
What Does The Institutional Ownership Tell Us About Lifeway Foods?
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.
We can see that Lifeway Foods does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Lifeway Foods' historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in Lifeway Foods. Our data shows that Danone S.A. is the largest shareholder with 23% of shares outstanding. Edward Smolyansky is the second largest shareholder owning 18% of common stock, and Julie Smolyansky holds about 14% of the company stock. Julie Smolyansky, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.
To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.
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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.
Insider Ownership Of Lifeway Foods
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 maintain a significant holding in Lifeway Foods, Inc.. Insiders have a US$66m stake in this US$198m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.
General Public Ownership
The general public, who are usually individual investors, hold a 22% stake in Lifeway Foods. 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.
Private Company Ownership
We can see that Private Companies own 3.4%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
Public Company Ownership
We can see that public companies hold 23% of the Lifeway Foods shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Lifeway Foods is showing 2 warning signs in our investment analysis , and 1 of those is significant...
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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.
