In This Article:
Key Insights
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Given the large stake in the stock by institutions, Applied Materials' stock price might be vulnerable to their trading decisions
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49% of the business is held by the top 25 shareholders
A look at the shareholders of Applied Materials, Inc. (NASDAQ:AMAT) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 83% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And things are looking up for institutional investors after the company gained US$13b in market cap last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 45%.
Let's take a closer look to see what the different types of shareholders can tell us about Applied Materials.
View our latest analysis for Applied Materials
What Does The Institutional Ownership Tell Us About Applied Materials?
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.
Applied Materials 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. 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 Applied Materials' earnings history below. Of course, the future is what really matters.
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 Applied Materials. The Vanguard Group, Inc. is currently the largest shareholder, with 8.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.3% and 7.3%, of the shares outstanding, respectively.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Applied Materials
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.