Institutional investors have a lot riding on Micron Technology, Inc. (NASDAQ:MU) with 82% ownership

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Simply Wall St

Sun, Sep 3, 2023, 5:00 AM 4 min read

Every investor in Micron Technology, Inc. (NASDAQ:MU) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 82% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And as as result, institutional investors reaped the most rewards after the company's stock price gained 10% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 26%.

Let's delve deeper into each type of owner of Micron Technology, beginning with the chart below.

View our latest analysis for Micron Technology

ownership-breakdown — NasdaqGS:MU Ownership Breakdown September 3rd 2023

What Does The Institutional Ownership Tell Us About Micron Technology?

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.

As you can see, institutional investors have a fair amount of stake in Micron Technology. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Micron Technology's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth — NasdaqGS:MU Earnings and Revenue Growth September 3rd 2023

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Micron Technology. The Vanguard Group, Inc. is currently the company's largest shareholder with 8.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.2% and 7.9%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 22 have the combined ownership of 50% 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.

Insider Ownership Of Micron Technology

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of Micron Technology, Inc. in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$188m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 17% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Micron Technology better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Micron Technology .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.