Institutional investors may adopt severe steps after Alexander & Baldwin, Inc.'s (NYSE:ALEX) latest 4.4% drop adds to a year losses
Institutions' substantial holdings in Alexander & Baldwin implies that they have significant influence over the company's share price
A total of 6 investors have a majority stake in the company with 51% ownership
Past performance of a company along with ownership data serve to give a strong idea about prospects for a business
To get a sense of who is truly in control of Alexander & Baldwin, Inc. (NYSE:ALEX), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 87% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
And institutional investors saw their holdings value drop by 4.4% last week. The recent loss, which adds to a one-year loss of 18% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Alexander & Baldwin which might hurt individual investors.
In the chart below, we zoom in on the different ownership groups of Alexander & Baldwin.
Check out our latest analysis for Alexander & Baldwin
What Does The Institutional Ownership Tell Us About Alexander & Baldwin?
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.
As you can see, institutional investors have a fair amount of stake in Alexander & Baldwin. 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 Alexander & Baldwin'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. We note that hedge funds don't have a meaningful investment in Alexander & Baldwin. BlackRock, Inc. is currently the largest shareholder, with 19% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 16% of common stock, and State Street Global Advisors, Inc. holds about 5.8% of the company stock.
We also observed that the top 6 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.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There is some analyst coverage of the stock, but it could still become more well known, with time.
Insider Ownership Of Alexander & Baldwin
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.
We can report that insiders do own shares in Alexander & Baldwin, Inc.. The insiders have a meaningful stake worth US$18m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Alexander & Baldwin. 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Alexander & Baldwin (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.
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.
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