Target Corporation’s (NYSE:TGT) latest 3.6% decline adds to one-year losses, institutional investors may consider drastic measures

Important Findings

• The institutions’ sizable holdings in Target imply that they have a significant impact on the company’s stock price
• A total of 22 investors with a 51% stake hold a majority stake in the company
• Data from analyst forecasts and ownership research can be used to better assess a company’s future performance

Every Target Corporation (NYSE:TGT) investor should be aware of the most powerful shareholder groups. The group with the most shares in the company, around 81%, is 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 3.6% last week. Needless to say, the recent loss, which further adds to shareholders’ 14% year-on-year loss, 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 downtrend continues, institutions could come under pressure to sell Target, which could have a negative impact on individual investors.

In the table below, we zoom in on the different ownership groups of Target.

Check out our latest analysis for Target

What Does Institutional Ownership Tell Us About Target?

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.

As you can see, institutional investors have a significant stake in Target. This suggests some credibility among professional investors. But we can’t rely on that alone, as institutions sometimes make bad investments, just like everyone else. It’s not uncommon for the stock price to fall sharply when two large institutional investors attempt to sell a stock at the same time. So, it’s worth checking out Target’s past earnings history (below). Of course, keep in mind that there are other factors to consider as well.

Institutional investors own over 50% of the company, so collectively they can likely heavily influence board decisions. We find that hedge funds don’t have a meaningful investment in Target. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 9.3% of outstanding shares. BlackRock, Inc. is the second largest shareholder with 7.4% of the common stock and State Street Global Advisors, Inc. owns approximately 7.2% of the company’s stock.

A closer look at our ownership numbers suggests that the 22 largest shareholders together hold a 51% stake, meaning no single shareholder has the majority.

Studying institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be done by studying analyst sentiment. Quite a few analysts cover the stock, so you can easily look at the projected growth.

Insider ownership of target

The definition of corporate insider can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management runs the business, but the CEO is accountable to the board even if he or she is a member.

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 latest data shows that insiders own less than 1% of Target Corporation. Since it’s a large company, we’d only expect insiders to own a small percentage of it. But it’s worth noting that they own $167 million worth of stock. 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 — including retail investors — own 18% of the shares in the company, so it can’t be ignored. While this ownership size is substantial, it may not be enough to change company policy if the decision is not aligned with other major shareholders.

Next Steps:

I find it very interesting to see who exactly owns a company. But to really gain insight, we need to consider other information as well. Case in point: We discovered it 4 warning signs for Target They should be aware and one of them should not be ignored.

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.

Do you have any feedback about this article? Concerned about the content? Get in touch directly with us. Alternatively, send an email to the editorial team (at) simplywallst.com.

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.