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Key Insights

• Institutions' substantial holdings in Renishaw implies that they have significant influence over the company's share price

• 50% of the business is held by the top 25 shareholders

• Insiders have sold recently

A look at the shareholders of Renishaw plc (LON:RSW) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 44% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors would probably welcome last week's 6.1% increase in the share price after a year of 3.1% losses as a sign that returns may to begin trending higher.

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

View our latest analysis for Renishaw

What Does The Institutional Ownership Tell Us About Renishaw?

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.

Renishaw 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. 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 Renishaw's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Renishaw. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Renishaw's case, its Top Key Executive, Daniel Deer, is the largest shareholder, holding 17% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.5% and 4.4% of the stock.

After doing some more digging, we found that the top 25 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.