Institutional investors may adopt severe steps after V.F. Corporation’s (NYSE:VFC) latest 12% drop adds to a year losses

Important Findings

  • Given the large holdings of institutions in the stock, VF’s stock price could be vulnerable to their trading decisions
  • 51% of the company is held by the top 8 shareholders
  • Insiders have been buying lately

Every investor in VF Corporation (NYSE:VFC) should be aware of the most powerful shareholder groups. The group with the most shares in the company, around 87%, are institutions. That is, the group will benefit most when the stock goes up (or lose most when it goes down).

And institutional investors suffered the heaviest losses after the company’s share price fell 12% last week. Needless to say, the recent loss, which further adds to shareholders’ one-year loss of 55%, may not go down well with this particular category of shareholders. Institutions or “liquidity providers” control large sums of money and therefore these types of investors usually have a large influence on stock price movements. Therefore, if the decline continues, institutional investors could be pressured to sell VF, which could hurt individual investors.

Let’s dive deeper into each type of VF owner starting with the table below.

Check out our latest analysis for VF

NYSE:VFC ownership breakdown March 10, 2023

What does institutional ownership tell us about VF?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. As such, they typically consider buying larger companies that are included in the relevant benchmark index.

VF already has institutions in the share register. In fact, they own a respectable stake in the company. This may indicate that the company has a certain level of credibility in the investor community. However, it’s best not to rely on the supposed confirmation that comes from institutional investors. They too are sometimes wrong. When multiple institutions own a stock, there is always a risk that they will find themselves in a “crowded trade”. When such a trade goes awry, multiple parties can compete to sell shares quickly. This risk is higher in a company without a growth history. You can see VF’s historical earnings and earnings below, but remember there’s still more to be told.

NYSE: VFC Earnings and Revenue Growth March 10, 2023

Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. We note that hedge funds have no significant investment in VF. Vanguard Group, Inc. is currently the largest shareholder with 11% of outstanding shares. State Street Global Advisors, Inc. and PNC Financial Services Group Inc., Banking Investments are the second and third largest shareholders with 11% and 9.9% of the outstanding shares, respectively.

Upon further examination, we found that more than half of the company’s stock is owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are to some extent balanced by the smaller ones.

While examining a company’s institutional ownership can add value to your research, it’s also a good practice to research analyst recommendations to gain a deeper understanding of a stock’s expected performance. Quite a few analysts cover the stock, so you can easily look at the projected growth.

Insider ownership of VF

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. Management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

Our information indicates that VF Corporation insiders own less than 1% of the company. It’s a very large company, so it would be surprising to see insiders own a large portion of the company. Although their ownership is less than 1%, we can see that the board members collectively own $33 million worth of stock (at current prices). It’s always good to see at least some insider owners, but it might be worth checking to see if those insiders have sold.

General Public Property

The general public, who are usually individual investors, hold a 13% stake in VF. While this group may not necessarily call the shots, they certainly can have a real impact on how the company is run.

Next Steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Case in point: We discovered it 4 Warning Signs of VF You should be aware of this, and 2 of them are a bit uncomfortable.

Ultimately the future is the most important thing. You can access it free Report on analysts’ forecasts for the company.

Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

The assessment is complex, but we help to simplify it.

Find out if VF might be over or undervalued by checking out our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.

Check out the free analysis

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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