Howden Joinery Group Plc's (LON:HWDN) high institutional ownership speaks for itself as stock continues to impress, up 3.1% over last week

editorial-team@simplywallst.com (Simply Wall St)

Sun, Mar 31, 2024, 3:05 AM 4 min read

Given the large stake in the stock by institutions, Howden Joinery Group's stock price might be vulnerable to their trading decisions
A total of 20 investors have a majority stake in the company with 51% ownership
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in Howden Joinery Group Plc (LON:HWDN) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 87% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 3.1% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 34%.

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

See our latest analysis for Howden Joinery Group

ownership-breakdown — LSE:HWDN Ownership Breakdown March 31st 2024

What Does The Institutional Ownership Tell Us About Howden Joinery Group?

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 Howden Joinery Group does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Howden Joinery Group, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — LSE:HWDN Earnings and Revenue Growth March 31st 2024

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Howden Joinery Group is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 4.8% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.2% and 3.8% of the stock.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 20 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Howden Joinery Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our data suggests that insiders own under 1% of Howden Joinery Group Plc in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own UK£12m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. 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. Case in point: We've spotted 2 warning signs for Howden Joinery Group you should be aware of.

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.