Institutional investors are Matthews International Corporation's (NASDAQ:MATW) biggest bettors and were rewarded after last week's US$76m market cap gain
Key Insights
Given the large stake in the stock by institutions, Matthews International's stock price might be vulnerable to their trading decisions
The top 8 shareholders own 53% of the company
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
Every investor in Matthews International Corporation (NASDAQ:MATW) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 83% ownership. 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$76m in market cap last week. The one-year return on investment is currently 53% and last week's gain would have been more than welcomed.
In the chart below, we zoom in on the different ownership groups of Matthews International.
Check out our latest analysis for Matthews International
What Does The Institutional Ownership Tell Us About Matthews International?
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 Matthews International does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Matthews International's earnings history below. Of course, the future is what really matters.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Matthews International. Our data shows that BlackRock, Inc. is the largest shareholder with 16% of shares outstanding. With 12% and 5.9% of the shares outstanding respectively, The Vanguard Group, Inc. and Phoenix Investments & Finances Ltd are the second and third largest shareholders. In addition, we found that Joseph Bartolacci, the CEO has 1.1% of the shares allocated to their name.
We also observed that the top 8 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.
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. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Matthews International
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.
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 Matthews International Corporation. This is a big company, so it is good to see this level of alignment. Insiders own US$46m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 14% stake in Matthews International. 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.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Matthews International has 2 warning signs (and 1 which is concerning) 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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