The Charles Schwab Corporation’s (NYSE:SCHW) latest 5.6% decline adds to one-year losses, institutional investors may consider drastic measures

Important Findings

• The institutions’ sizeable holdings in Charles Schwab imply that they have a significant impact on the company’s share price
• A total of 17 investors hold a majority stake of 50% in the company
• Insiders recently sold

If you want to know who really controls Charles Schwab Corporation (NYSE:SCHW), you need to look at the composition of its stock register. With a 73% share, institutions own the maximum shares in the company. 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 5.6% last week. The recent loss, which adds to a 2.8% one-year loss for shareholders, may not sit well with this group of investors. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Therefore, if the decline continues, institutional investors could be pressured to sell Charles Schwab, which could hurt individual investors.

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

Check out our latest analysis for Charles Schwab

What does institutional ownership tell us about Charles Schwab?

Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are included in major indices.

We can see that Charles Schwab has institutional investors; and they hold a good portion of the company’s stock. 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 Charles Schwab’s historical earnings and earnings below, but remember there’s still more to be told.

Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. Hedge funds don’t own many shares in Charles Schwab. Looking at our data, we can see that the largest shareholder is Toronto-Dominion Bank with 12% of outstanding shares. Vanguard Group, Inc. is the second largest shareholder with 6.7% of the common stock and BlackRock, Inc. owns approximately 5.7% of the company’s stock.

If we look at the register of shareholders, we can see that 50% of the ownership is controlled by the 17 largest shareholders, meaning that no single shareholder has a controlling interest in the property.

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. There are a fair number of analysts covering the stock, so it might be helpful to get their overall view on the future.

Insider ownership by Charles Schwab

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.

Insider ownership is positive when it signals leadership thinks like the true owners of the company. However, a high proportion of insiders can give immense power to even a small group within the organization. This can sometimes be negative.

Our latest data shows that insiders own some shares in Charles Schwab Corporation. The insiders have a significant stake worth $2.6 billion. Most would say that this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking to see if these insiders have sold.

General Public Property

The general public, who are typically individual investors, own an 11% stake in Charles Schwab. While this ownership may not be sufficient to sway a policy decision in their favor, they can still collectively influence company policy.

ownership of public companies

It seems to us that public companies own 12% of Charles Schwab. We cannot be sure, but it is quite possible that this is a strategic investment. The companies may be similar or collaborate.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Charles Schwab, we need to consider many other factors. You should be aware of this 1 warning sign we sighted with Charles Schwab.

But ultimately it is the future, not the past that determines how well the owners of this business will do. Therefore, we think it’s wise to take a look at this free report that shows whether analysts are predicting a brighter future.

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.

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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.