Key Insights

• Given the large stake in the stock by institutions, Paychex's stock price might be vulnerable to their trading decisions

• A total of 11 investors have a majority stake in the company with 51% ownership

• Insiders have sold recently

A look at the shareholders of Paychex, Inc. (NASDAQ:PAYX) can tell us which group is most powerful. With 77% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

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

See our latest analysis for Paychex

What Does The Institutional Ownership Tell Us About Paychex?

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 Paychex. 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. 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 Paychex's historic earnings and revenue below, but keep in mind there's always more to the story.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Paychex. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Paychex's case, its Top Key Executive, B. Golisano, is the largest shareholder, holding 10% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.6% and 7.9%, of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.