Key Insights

• Significantly high institutional ownership implies ARB's stock price is sensitive to their trading actions

• The top 12 shareholders own 50% of the company

• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of ARB Corporation Limited (ASX:ARB) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 49% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors endured the highest losses after the company's market cap fell by AU$119m last week. However, the 43% one-year return to shareholders may have helped lessen their pain. They should, however, be mindful of further losses in the future.

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

See our latest analysis for ARB

What Does The Institutional Ownership Tell Us About ARB?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

ARB already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see ARB's historic earnings and revenue below, but keep in mind there's always more to the story.

ARB is not owned by hedge funds. Our data shows that Bennelong Funds Management Group Pty Ltd is the largest shareholder with 13% of shares outstanding. For context, the second largest shareholder holds about 5.9% of the shares outstanding, followed by an ownership of 5.8% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 12 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.