In This Article:
Key Insights
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Given the large stake in the stock by institutions, Merck's stock price might be vulnerable to their trading decisions
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The top 25 shareholders own 45% of the company
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Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
If you want to know who really controls Merck & Co., Inc. (NYSE:MRK), then you'll have to look at the makeup of its share registry. With 79% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.
Let's take a closer look to see what the different types of shareholders can tell us about Merck.
Check out our latest analysis for Merck
What Does The Institutional Ownership Tell Us About Merck?
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.
We can see that Merck does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Merck's earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Merck is not owned by hedge funds. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 9.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.4% and 4.7%, of the shares outstanding, respectively.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.