Key Insights

• Given the large stake in the stock by institutions, Lifecore Biomedical's stock price might be vulnerable to their trading decisions
• A total of 7 investors have a majority stake in the company with 54% ownership
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

Our free stock report includes 3 warning signs investors should be aware of before investing in Lifecore Biomedical. Read for free now.

If you want to know who really controls Lifecore Biomedical, Inc. (NASDAQ:LFCR), then you'll have to look at the makeup of its share registry. With 45% stake, hedge funds possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for hedge funds investors after the company gained US$24m in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 7.6%.

Let's delve deeper into each type of owner of Lifecore Biomedical, beginning with the chart below.

See our latest analysis for Lifecore Biomedical

What Does The Institutional Ownership Tell Us About Lifecore Biomedical?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in Lifecore Biomedical. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Lifecore Biomedical's historic earnings and revenue below, but keep in mind there's always more to the story.

It looks like hedge funds own 45% of Lifecore Biomedical shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company's largest shareholder is Wynnefield Capital, Inc., with ownership of 13%. In comparison, the second and third largest shareholders hold about 12% and 9.1% of the stock.

We did some more digging and found that 7 of the top shareholders account for roughly 54% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Lifecore Biomedical

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our information suggests that Lifecore Biomedical, Inc. insiders own under 1% of the company. It has a market capitalization of just US$250m, and the board has only US$2.5m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in Lifecore Biomedical. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Lifecore Biomedical (of which 1 is a bit concerning!) you should know about.

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.