Institutional owners may consider drastic measures as Burberry Group plc's (LON:BRBY) recent UK£101m drop adds to long-term losses
In This Article:
Key Insights
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Institutions' substantial holdings in Burberry Group implies that they have significant influence over the company's share price
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The top 13 shareholders own 50% of the company
Every investor in Burberry Group plc (LON:BRBY) should be aware of the most powerful shareholder groups. With 84% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).
And institutional investors endured the highest losses after the company's share price fell by 4.2% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 63% might not go down well especially with this category of shareholders. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Burberry Group which might hurt individual investors.
In the chart below, we zoom in on the different ownership groups of Burberry Group.
Check out our latest analysis for Burberry Group
What Does The Institutional Ownership Tell Us About Burberry 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.
We can see that Burberry Group 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Burberry Group, (below). Of course, keep in mind that there are other factors to consider, too.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Burberry Group. Lindsell Train Limited is currently the largest shareholder, with 7.5% of shares outstanding. The second and third largest shareholders are Massachusetts Financial Services Company and BlackRock, Inc., with an equal amount of shares to their name at 6.6%.
After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.