Yahoo Finance Institutional owners may consider drastic measures as Fresenius Medical Care AG's (ETR:FME) recent €719m drop adds to long-term losses
Key Insights
Given the large stake in the stock by institutions, Fresenius Medical Care's stock price might be vulnerable to their trading decisions
A total of 5 investors have a majority stake in the company with 52% ownership
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
A look at the shareholders of Fresenius Medical Care AG (ETR:FME) can tell us which group is most powerful. With 41% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, institutional investors endured the highest losses last week after market cap fell by €719m. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 12% for shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. Hence, if weakness in Fresenius Medical Care's share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.
Let's delve deeper into each type of owner of Fresenius Medical Care, beginning with the chart below.
See our latest analysis for Fresenius Medical Care
What Does The Institutional Ownership Tell Us About Fresenius Medical Care?
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 Fresenius Medical Care. 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 Fresenius Medical Care'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 Fresenius Medical Care. The company's largest shareholder is Fresenius SE & Co. KGaA, with ownership of 32%. With 8.0% and 5.0% of the shares outstanding respectively, Pzena Investment Management, Inc. and Harris Associates L.P. are the second and third largest shareholders.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Fresenius Medical Care
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 information suggests that Fresenius Medical Care AG insiders own under 1% of the company. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own €2.3m of stock. Arguably recent buying and selling is just as important to consider. 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 27% stake in Fresenius Medical Care. 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.
Public Company Ownership
It appears to us that public companies own 32% of Fresenius Medical Care. 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. Take risks for example - Fresenius Medical Care has 2 warning signs we think 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.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
