Yahoo Finance The Sherwin-Williams Company's (NYSE:SHW) institutional shareholders had a great week as one-year returns increased after a 3.2% gain last week
Key Insights
Given the large stake in the stock by institutions, Sherwin-Williams' stock price might be vulnerable to their trading decisions
A total of 22 investors have a majority stake in the company with 50% ownership
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
Every investor in The Sherwin-Williams Company (NYSE:SHW) should be aware of the most powerful shareholder groups. With 78% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And as as result, institutional investors reaped the most rewards after the company's stock price gained 3.2% last week. One-year return to shareholders is currently 9.9% and last week’s gain was the icing on the cake.
Let's take a closer look to see what the different types of shareholders can tell us about Sherwin-Williams.
View our latest analysis for Sherwin-Williams
What Does The Institutional Ownership Tell Us About Sherwin-Williams?
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.
We can see that Sherwin-Williams does have institutional investors; and they hold a good portion of the company's stock. 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 Sherwin-Williams' earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Sherwin-Williams. The Vanguard Group, Inc. is currently the company's largest shareholder with 8.2% of shares outstanding. The Sherwin-Williams Company 401(K) Plan is the second largest shareholder owning 7.6% of common stock, and BlackRock, Inc. holds about 6.5% of the company stock.
A closer look at our ownership figures suggests that the top 22 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Sherwin-Williams
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 The Sherwin-Williams Company in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$207m of stock. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.
General Public Ownership
With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Sherwin-Williams. 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:
It's always worth thinking about the different groups who own shares in a company. But to understand Sherwin-Williams better, we need to consider many other factors. Take risks for example - Sherwin-Williams has 1 warning sign we think you should be aware of.
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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