Key Insights

• Given the large stake in the stock by institutions, WPP's stock price might be vulnerable to their trading decisions

• The top 24 shareholders own 50% of the company

• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of WPP plc (LON:WPP) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 64% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, institutional investors ended up benefitting the most after the company hit UK£8.9b in market cap. One-year return to shareholders is currently 25% and last week’s gain was the icing on the cake.

In the chart below, we zoom in on the different ownership groups of WPP.

Check out our latest analysis for WPP

What Does The Institutional Ownership Tell Us About WPP?

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.

WPP already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 WPP, (below). Of course, keep in mind that there are other factors to consider, too.

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 WPP. Our data shows that BlackRock, Inc. is the largest shareholder with 8.0% of shares outstanding. For context, the second largest shareholder holds about 6.2% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 24 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.