Yahoo Finance Institutional investors may adopt severe steps after Nordstrom, Inc.'s (NYSE:JWN) latest 3.3% drop adds to a year losses
Key Insights
Institutions' substantial holdings in Nordstrom implies that they have significant influence over the company's share price
The top 6 shareholders own 50% of the company
To get a sense of who is truly in control of Nordstrom, Inc. (NYSE:JWN), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And institutional investors endured the highest losses after the company's share price fell by 3.3% last week. The recent loss, which adds to a one-year loss of 37% 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 downtrend continues, institutions may face pressures to sell Nordstrom, which might have negative implications on individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Nordstrom.
See our latest analysis for Nordstrom
What Does The Institutional Ownership Tell Us About Nordstrom?
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.
Nordstrom already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Nordstrom's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Nordstrom. Looking at our data, we can see that the largest shareholder is Bruce Nordstrom with 16% of shares outstanding. For context, the second largest shareholder holds about 9.8% of the shares outstanding, followed by an ownership of 9.5% by the third-largest shareholder. Furthermore, CEO Erik Nordstrom is the owner of 1.8% of the company's shares.
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.
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.
Insider Ownership Of Nordstrom
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our most recent data indicates that insiders own a reasonable proportion of Nordstrom, Inc.. It has a market capitalization of just US$2.4b, and insiders have US$710m worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Nordstrom. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Public Company Ownership
Public companies currently own 9.8% of Nordstrom stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Nordstrom that you should be aware of.
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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