key insights
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Significantly high institutional ownership means Graincorp's share price is sensitive to its trading actions.
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A total of 25 investors hold a majority stake in the company, holding 50% of the ownership.
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Recent Sales by Insiders
Every investor in GrainCorp Limited (ASX:GNC) should be aware of the most powerful shareholder groups. The group that owns the most shares in the company (about 52% to be exact) is institutional investors. In other words, this group faces the greatest upside potential (or downside risk).
Because institutional investors have vast resources and liquidity, their investment decisions tend to have significant influence, especially for individual investors. As a result, large amounts of institutional funds invested in a company are generally considered a positive attribute.
The chart below zooms in on the different ownership groups for GrainCorp.
Check out our latest analysis for GrainCorp.
What does institutional ownership tell us about GrainCorp?
Financial institutions typically measure themselves against a benchmark when reporting to their own investors, so they often see increased enthusiasm for a stock once it's included in a major index. We would expect most companies to have some institutions on their register, especially if they are growing.
We can see that GrainCorp has institutional investors. And they own a significant portion of the company's stock. This implies the analysts working for these institutions have considered the stock and they like it. But just like anyone else, they can 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 GrainCorp, (below). Of course, keep in mind that there are other factors to consider as well.
Institutional investors own more than half of the outstanding shares, so the board will need to pay attention to their preferences. Note that hedge funds don't have a meaningful investment in GrainCorp. The company's largest shareholder is State Street Global Advisors, Inc., with an ownership of 6.3%. By contrast, the second and third largest shareholders hold approximately 6.1% and 6.1% of the stock, respectively.
If we take a closer look at our ownership figures, we can see that the top 25 shareholders have a combined ownership of 50%, implying that no single shareholder has a majority.
Researching institutional ownership is a good way to assess and filter a stock's expected performance. The same can be done by studying analyst sentiment. There are quite a few analysts covering this stock, so it might be useful to know their aggregate forecast for the future.
Insider ownership in GrainCorp
The definition of a company insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and includes at least board members. Management ultimately answers to the board. However, it is not uncommon for managers to be members of the board of directors. This is especially true if the manager is the founder or CEO.
Most consider insider ownership a positive, because it can indicate the board is well aligned with other shareholders. However, in some cases, too much power may be concentrated within this group.
Our latest data shows that less than 1% of GrainCorp Limited shares are owned by insiders. Because the company is a large company, even small proportional profits can create alignment between the board and shareholders. In this case, insiders say he owns AU$14m worth of shares. It's good to see board members owning shares, so it might be worth checking if insiders are buying shares.
Open to the public
The general public (mainly retail investors), who own 47% of the shares, have some influence over GrainCorp. While this size of ownership may not be enough to sway policy decisions in their favor, they can still collectively influence company policy.
Next steps:
It's always worth thinking about the different groups who own shares in a company. However, to understand GrainCorp better, you need to consider many other factors. Note that GrainCorp is shown 4 warning signs in investment analysis one of which could be serious…
If you want to know what analysts are predicting in terms of future growth, don't miss this free Report on analyst forecasts.
Note: The numbers in this article are calculated using data from the previous 12 months and refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
