Private equity firms account for 58% of loanDepot, Inc.'s (NYSE:LDI) ownership, while individual investors account for 20%
Key Insights
The considerable ownership by private equity firms in loanDepot indicates that they collectively have a greater say in management and business strategy
The largest shareholder of the company is PCP Managers, L.P. with a 58% stake
A look at the shareholders of loanDepot, Inc. (NYSE:LDI) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private equity firms with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, individual investors make up 20% of the company’s shareholders.
Let's delve deeper into each type of owner of loanDepot, beginning with the chart below.
Check out our latest analysis for loanDepot
What Does The Institutional Ownership Tell Us About loanDepot?
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.
loanDepot already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 loanDepot's historic earnings and revenue below, but keep in mind there's always more to the story.
loanDepot is not owned by hedge funds. Our data shows that PCP Managers, L.P. is the largest shareholder with 58% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.4% and 2.4% of the shares outstanding respectively, Jeffrey DerGurahian and Anthony Hsieh are the second and third largest shareholders. Note that the second and third-largest shareholders are also Chief Investment Officer and Chairman of the Board, respectively, meaning that the company's top shareholders are insiders.
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 could look into forecast growth quite easily.
Insider Ownership Of loanDepot
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
We can see that insiders own shares in loanDepot, Inc.. As individuals, the insiders collectively own US$60m worth of the US$626m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 20% stake in loanDepot. 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 Equity Ownership
With a stake of 58%, private equity firms could influence the loanDepot board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand loanDepot better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for loanDepot you should know about.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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