Key Insights

• Significant control over loanDepot by private equity firms implies that the general public has more power to influence management and governance-related decisions
• PCP Managers, L.P. owns 56% of the company
• Institutions own 12% of loanDepot

To get a sense of who is truly in control of loanDepot, Inc. (NYSE:LDI), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private equity firms with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, private equity firms endured the biggest losses as the stock fell by 12%.

In the chart below, we zoom in on the different ownership groups of 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.

We can see that loanDepot does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at loanDepot's earnings history below. Of course, the future is what really matters.

loanDepot is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is PCP Managers, L.P. with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. With 3.4% and 2.4% of the shares outstanding respectively, Jeffrey DerGurahian and The Vanguard Group, Inc. are the second and third largest shareholders. Jeffrey DerGurahian, who is the second-largest shareholder, also happens to hold the title of Chief Investment Officer.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of loanDepot

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.

We can see that insiders own shares in loanDepot, Inc.. It has a market capitalization of just US$762m, and insiders have US$73m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 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

Private equity firms hold a 56% stake in loanDepot. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with loanDepot , and understanding them should be part of your investment process.

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.

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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.