In the wake of Ford Motor Company’s (NYSE:F) latest US$8.1b market cap drop, institutional owners may be forced to take drastic action | Daily News Byte

In the wake of Ford Motor Company’s (NYSE:F) latest US.1b market cap drop, institutional owners may be forced to take drastic action

 | Daily News Byte

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Every investor in Ford Motor Company (NYSE:F) should be aware of the most powerful shareholder groups. With a 49% stake, institutions hold the highest stake in the company. Put another way, the group faces the highest potential upside (or downside risk).

As a result, institutional investors endured the biggest losses last week after the market cap fell by US$8.1b. Needless to say, the recent loss further adding to the shareholders’ one-year loss of 41% may not go down well especially with this category of shareholders. Institutions or “liquidators” control large sums of money and therefore, these types of investors usually have a large influence on stock price movements. Therefore, if weakness in Ford Motor’s share price continues, institutional investors may be forced to sell the stock, which may not be ideal for individual investors.

Let’s take a deeper look at each type of Ford Motor owner, starting with the chart below.

Check out our latest review for Ford Motor

ownership-destruction

ownership-destruction

What Does Institutional Ownership Tell Us About Ford Motor?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies included in major indexes.

As you can see, institutional investors have a fair amount of stake in Ford Motor. This indicates that the analysts working for those institutions have looked at the stock and they like it. But like anything else, they can make mistakes. If multiple institutions change their view on a stock at the same time, you’ll see the share price drop quickly. Therefore, it is worth taking a look at Ford Motor’s earnings history below. Of course, the future is what really matters.

profit-and-profit-growth

profit-and-profit-growth

We note that hedge funds have no significant investments in Ford Motor. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 8.3% of the outstanding shares. BlackRock, Inc. is the second largest shareholder owning 6.4% of the common stock, and Newport Trust Company, Asset Management Arm holds approximately 3.7% of the company’s stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, meaning that the company’s shares are widely dispersed and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it’s also good practice to research analyst recommendations to better understand a stock’s expected performance. Many analysts cover the stock, so it might be worth seeing what they’re predicting as well.

Insider Property Of Ford Motor

The definition of company insiders can be subjective and varies between jurisdictions. Our data reflects individual insiders, who hire board members at least. The company’s management answers to the board and the latter must represent the interests of the shareholders. Interestingly, sometimes top managers are on the board themselves.

I usually consider insider ownership a good thing. However, in some instances it makes it more difficult for other shareholders to hold the board accountable for decisions.

We can report that insiders own shares in Ford Motor Company. Insiders have a significant stake worth US$608m. Good to see this level of investment. You can check here to see if those insiders have bought recently.

General Public Ownership

With 49% ownership, the general public, mostly made up of individual investors, has some degree of sway over Ford Motor. Although this size of ownership may not be enough to influence a policy decision in their favor, they can still make a collective impact on company policies.

Next Steps:

While it is worth considering the different groups that own a company, there are other factors that are more important. To that end, you should know about 2 warnings we saw Ford Motor (including 1 that we were a little uncomfortable with) .

Eventually the future is the most important. You can access it Free report on analyst forecasts for the company.

NB: The figures in this article are calculated using data from the last twelve months, which refers to the 12-month period ending on the last date of the month in which the financial statement is dated. This may not be consistent throughout the year with annual report numbers.

Do you have feedback on this article? Worried about content? Please contact directly to us. Alternatively, email editorial-team (at) simplywallst.com.

This Simply Wall St article is general. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals, or your financial situation. We aim to bring you long-term focused analysis driven by primary data. Note that our review may not factor in the company’s latest price-sensitive or material quality announcements. Simply Wall St has no position in any of the stocks mentioned.

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