With 67% ownership in Federal Agricultural Mortgage Corporation (NYSE:AGM), institutional investors have a lot riding on the business
Key Insights
Given the large stake in the stock by institutions, Federal Agricultural Mortgage's stock price might be vulnerable to their trading decisions
50% of the business is held by the top 18 shareholders
Every investor in Federal Agricultural Mortgage Corporation (NYSE:AGM) should be aware of the most powerful shareholder groups. With 67% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And things are looking up for institutional investors after the company gained US$141m in market cap last week. The one-year return on investment is currently 44% and last week's gain would have been more than welcomed.
In the chart below, we zoom in on the different ownership groups of Federal Agricultural Mortgage.
View our latest analysis for Federal Agricultural Mortgage
What Does The Institutional Ownership Tell Us About Federal Agricultural Mortgage?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that Federal Agricultural Mortgage 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. 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 Federal Agricultural Mortgage, (below). Of course, keep in mind that there are other factors to consider, too.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Federal Agricultural Mortgage. BlackRock, Inc. is currently the largest shareholder, with 7.9% of shares outstanding. With 5.3% and 4.6% of the shares outstanding respectively, The Vanguard Group, Inc. and Boston Partners Global Investors, Inc. are the second and third largest shareholders.
After doing some more digging, we found that the top 18 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.
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.
Insider Ownership Of Federal Agricultural Mortgage
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Shareholders would probably be interested to learn that insiders own shares in Federal Agricultural Mortgage Corporation. This is a big company, so it is good to see this level of alignment. Insiders own US$25m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Company Ownership
It seems that Private Companies own 4.5%, of the Federal Agricultural Mortgage stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Federal Agricultural Mortgage has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
