Institutional investors are Citigroup Inc.’s (NYSE:C) biggest bettors and were rewarded after last week’s US$3.0b market cap gain

Key Insights

• Institutions’ substantial holdings in Citigroup implies that they have significant influence over the company’s share price

• The top 25 shareholders own 43% of the company

• Insiders have sold recently

If you want to know who really controls Citigroup Inc. (NYSE:C), then you’ll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 69% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And things are looking up for institutional investors after the company gained US$3.0b in market cap last week. One-year return to shareholders is currently 18% and last week’s gain was the icing on the cake.

Let’s delve deeper into each type of owner of Citigroup, beginning with the chart below.

Check out our latest analysis for Citigroup

What Does The Institutional Ownership Tell Us About Citigroup?

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 Citigroup. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at Citigroup’s earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don’t have a meaningful investment in Citigroup. The Vanguard Group, Inc. is currently the company’s largest shareholder with 8.7% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.6% of common stock, and State Street Global Advisors, Inc. holds about 4.2% of the company stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Citigroup

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Citigroup Inc.. As it is a large company, we’d only expect insiders to own a small percentage of it. But it’s worth noting that they own US$218m worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 28% stake in Citigroup. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Citigroup better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we’ve spotted 1 warning sign for Citigroup you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Source: finance.yahoo.com