Yahoo Finance After losing 46% in the past year, Alibaba Group Holding Limited (NYSE:BABA) institutional owners must be relieved by the recent gain
If you want to know who really controls Alibaba Group Holding Limited (NYSE:BABA), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 35% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
Last week's US$14b market cap gain would probably be appreciated by institutional investors, especially after a year of 46% losses.
Let's delve deeper into each type of owner of Alibaba Group Holding, beginning with the chart below.
See our latest analysis for Alibaba Group Holding
What Does The Institutional Ownership Tell Us About Alibaba Group Holding?
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 Alibaba Group Holding. 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 Alibaba Group Holding's earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Alibaba Group Holding. SoftBank Group Corp. is currently the largest shareholder, with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 2.9% and 2.6%, of the shares outstanding, respectively.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Alibaba Group Holding
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can see that insiders own shares in Alibaba Group Holding Limited. The insiders have a meaningful stake worth US$8.1b. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 35% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Alibaba Group Holding. 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
It appears to us that public companies own 24% of Alibaba Group Holding. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Alibaba Group Holding is showing 2 warning signs in our investment analysis , you should know about...
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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