Yahoo Finance Institutional investors are Lowe's Companies, Inc.'s (NYSE:LOW) biggest bettors and were rewarded after last week's US$3.9b market cap gain
Key Insights
Given the large stake in the stock by institutions, Lowe's Companies' stock price might be vulnerable to their trading decisions
A total of 25 investors have a majority stake in the company with 46% ownership
A look at the shareholders of Lowe's Companies, Inc. (NYSE:LOW) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 77% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And things are looking up for institutional investors after the company gained US$3.9b in market cap last week. The one-year return on investment is currently 11% and last week's gain would have been more than welcomed.
Let's take a closer look to see what the different types of shareholders can tell us about Lowe's Companies.
Check out our latest analysis for Lowe's Companies
What Does The Institutional Ownership Tell Us About Lowe's Companies?
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.
Lowe's Companies already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Lowe's Companies, (below). Of course, keep in mind that there are other factors to consider, too.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Lowe's Companies. The Vanguard Group, Inc. is currently the largest shareholder, with 9.0% of shares outstanding. For context, the second largest shareholder holds about 7.4% of the shares outstanding, followed by an ownership of 4.2% by the third-largest shareholder.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Lowe's Companies
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 most recent data indicates that insiders own less than 1% of Lowe's Companies, Inc.. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$102m of stock. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
With a 23% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lowe's Companies. 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. Be aware that Lowe's Companies is showing 3 warning signs in our investment analysis , and 1 of those is a bit unpleasant...
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
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