Are Institutions Heavily Invested In Treasury Wine Estates Limited's (ASX:TWE) Shares?

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Simply Wall St

Tue, May 24, 2022, 10:31 PM 4 min read

A look at the shareholders of Treasury Wine Estates Limited (ASX:TWE) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. We also tend to see lower insider ownership in companies that were previously publicly owned.

Treasury Wine Estates is a pretty big company. It has a market capitalization of AU$8.3b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Treasury Wine Estates.

View our latest analysis for Treasury Wine Estates

ownership-breakdown — ASX:TWE Ownership Breakdown May 25th 2022

What Does The Institutional Ownership Tell Us About Treasury Wine Estates?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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

earnings-and-revenue-growth — ASX:TWE Earnings and Revenue Growth May 25th 2022

Hedge funds don't have many shares in Treasury Wine Estates. Our data shows that State Street Global Advisors, Inc. is the largest shareholder with 10% of shares outstanding. Capital Research and Management Company is the second largest shareholder owning 9.5% of common stock, and BlackRock, Inc. holds about 6.3% of the company stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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.

Insider Ownership Of Treasury Wine Estates

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.

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 information suggests that Treasury Wine Estates Limited insiders own under 1% of the company. Keep in mind that it's a big company, and the insiders own AU$8.6m worth of shares. The absolute value might be more important than the proportional share. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 57% stake in Treasury Wine Estates, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Treasury Wine Estates better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

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.