In This Article:
Key Insights
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Given the large stake in the stock by institutions, BAE Systems' stock price might be vulnerable to their trading decisions
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The top 14 shareholders own 51% of the company
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Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
A look at the shareholders of BAE Systems plc (LON:BA.) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 79% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Institutional investors endured the highest losses after the company's market cap fell by UK£1.2b last week. However, the 8.6% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.
In the chart below, we zoom in on the different ownership groups of BAE Systems.
Check out our latest analysis for BAE Systems
What Does The Institutional Ownership Tell Us About BAE Systems?
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.
We can see that BAE Systems does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 BAE Systems, (below). Of course, keep in mind that there are other factors to consider, too.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. BAE Systems is not owned by hedge funds. Capital Research and Management Company is currently the largest shareholder, with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.1% and 5.1%, of the shares outstanding, respectively.
After doing some more digging, we found that the top 14 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
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.