Key Insights
- LATAM Airlines Group’s significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
- The top 3 shareholders own 54% of the company
- Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
A look at the shareholders of LATAM Airlines Group S.A. (SNSE:LTM) can tell us which group is most powerful. With 43% stake, private companies 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).
Hedge funds, on the other hand, account for 23% of the company’s stockholders.
Let’s delve deeper into each type of owner of LATAM Airlines Group, beginning with the chart below.
View our latest analysis for LATAM Airlines Group
What Does The Institutional Ownership Tell Us About LATAM Airlines Group?
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 LATAM Airlines Group. 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 LATAM Airlines Group’s historic earnings and revenue below, but keep in mind there’s always more to the story.
It would appear that 23% of LATAM Airlines Group shares are controlled by hedge funds. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company’s largest shareholder is Lauca Investments, Llc, with ownership of 28%. With 16% and 10% of the shares outstanding respectively, Strategic Value Partners, LLC and Delta Air Lines, Inc. are the second and third largest shareholders.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of LATAM Airlines Group
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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 data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.
General Public Ownership
The general public, who are usually individual investors, hold a 16% stake in LATAM Airlines Group. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
We can see that Private Companies own 43%, 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 13% of the LATAM Airlines Group 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:
It’s always worth thinking about the different groups who own shares in a company. But to understand LATAM Airlines Group better, we need to consider many other factors. Be aware that LATAM Airlines Group is showing 5 warning signs in our investment analysis , and 2 of those are significant…
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.
Valuation is complex, but we’re helping make it simple.
Find out whether LATAM Airlines Group is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
