In This Article:
Key Insights
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Significantly high institutional ownership implies Kinder Morgan's stock price is sensitive to their trading actions
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50% of the business is held by the top 24 shareholders
Every investor in Kinder Morgan, Inc. (NYSE:KMI) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 64% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
In the chart below, we zoom in on the different ownership groups of Kinder Morgan.
View our latest analysis for Kinder Morgan
What Does The Institutional Ownership Tell Us About Kinder Morgan?
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.
Kinder Morgan 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 Kinder Morgan, (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 Kinder Morgan. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Kinder Morgan's case, its Top Key Executive, Richard Kinder, is the largest shareholder, holding 12% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.8% and 6.9%, of the shares outstanding, respectively.
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 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.