Institutional investors are T. Rowe Price Group, Inc.'s (NASDAQ:TROW) biggest bettors and were rewarded after last week's US$1.5b market cap gain
Key Insights
Significantly high institutional ownership implies T. Rowe Price Group's stock price is sensitive to their trading actions
The top 24 shareholders own 51% of the company
To get a sense of who is truly in control of T. Rowe Price Group, Inc. (NASDAQ:TROW), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 74% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
And things are looking up for institutional investors after the company gained US$1.5b in market cap last week. One-year return to shareholders is currently 26% and last week’s gain was the icing on the cake.
Let's delve deeper into each type of owner of T. Rowe Price Group, beginning with the chart below.
See our latest analysis for T. Rowe Price Group
What Does The Institutional Ownership Tell Us About T. Rowe Price Group?
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.
T. Rowe Price Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 T. Rowe Price Group's earnings history below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in T. Rowe Price Group. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 12%. BlackRock, Inc. is the second largest shareholder owning 8.8% of common stock, and State Street Global Advisors, Inc. holds about 6.7% of the company stock.
After doing some more digging, we found that the top 24 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
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 T. Rowe Price Group
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
Our most recent data indicates that insiders own some shares in T. Rowe Price Group, Inc.. It is a very large company, and board members collectively own US$545m worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand T. Rowe Price Group better, we need to consider many other factors.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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.