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Institutional owners may ignore NatWest Group plc's (LON:NWG) recent UK£1.4b market cap decline as longer-term profits stay in the green

Key Insights

  • Institutions' substantial holdings in NatWest Group implies that they have significant influence over the company's share price

  • 52% of the business is held by the top 4 shareholders

  • Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls NatWest Group plc (LON:NWG), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 47% 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).

Institutional investors was the group most impacted after the company's market cap fell to UK£25b last week. However, the 25% one-year returns may have helped alleviate their overall losses. They should, however, be mindful of further losses in the future.

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Let's take a closer look to see what the different types of shareholders can tell us about NatWest Group.

See our latest analysis for NatWest Group

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About NatWest 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 NatWest Group. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 NatWest Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
earnings-and-revenue-growth

Hedge funds don't have many shares in NatWest Group. Our data shows that HM Treasury is the largest shareholder with 42% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 4.3% of common stock, and Norges Bank Investment Management holds about 3.4% of the company stock.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 NatWest Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 most recent data indicates that insiders own less than 1% of NatWest Group plc. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own UK£22m 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

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NatWest Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 - NatWest Group has 1 warning sign 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.

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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