Yahoo Finance Institutional owners may consider drastic measures as Public Service Enterprise Group Incorporated's (NYSE:PEG) recent US$973m drop adds to long-term losses
Key Insights
Institutions' substantial holdings in Public Service Enterprise Group implies that they have significant influence over the company's share price
The top 20 shareholders own 51% of the company
Every investor in Public Service Enterprise Group Incorporated (NYSE:PEG) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 74% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And institutional investors saw their holdings value drop by 3.1% last week. The recent loss, which adds to a one-year loss of 6.9% 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 Public Service Enterprise Group which might hurt individual investors.
In the chart below, we zoom in on the different ownership groups of Public Service Enterprise Group.
View our latest analysis for Public Service Enterprise Group
What Does The Institutional Ownership Tell Us About Public Service Enterprise Group?
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 Public Service Enterprise Group. 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 Public Service Enterprise Group, (below). Of course, keep in mind that there are other factors to consider, too.
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 Public Service Enterprise Group. BlackRock, Inc. is currently the company's largest shareholder with 11% of shares outstanding. With 9.0% and 6.2% of the shares outstanding respectively, The Vanguard Group, Inc. and State Street Global Advisors, Inc. are the second and third largest shareholders.
After doing some more digging, we found that the top 20 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Public Service Enterprise Group
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data suggests that insiders own under 1% of Public Service Enterprise Group Incorporated in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$43m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 26% 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.
Next Steps:
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 3 warning signs with Public Service Enterprise Group (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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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