To get an idea of who actually controls Genuine Parts Company (NYSE: GPC), it’s important to understand the company’s ownership structure. With 77% of the capital, the institutions hold the maximum number of shares in the company. That is, the group will benefit the most if the stock goes up (or lose the most if there is a downturn).
And last week, institutional investors ended up benefiting the most after the company hit $19 billion in market capitalization. The one-year shareholder return is currently 16% and last week’s gain was the icing on the cake.
Let’s take a closer look at what different types of shareholders can tell us about genuine parts.
Check Out Our Latest OE Parts Analysis
What does institutional ownership tell us about original parts?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.
We can see that Genuine Parts has institutional investors; and they own a good part of the shares of the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Genuine Parts’ revenue and historical earnings below, but keep in mind there’s always more to tell.
Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Genuine Parts is not owned by hedge funds. The Vanguard Group, Inc. is currently the company’s largest shareholder with 12% of the shares outstanding. Meanwhile, the second and third largest shareholders hold 8.9% and 5.7% of the outstanding shares respectively.
A closer look at our ownership figures suggests that the top 24 shareholders hold a combined ownership of 50%, implying that no single shareholder has a majority.
While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.
Insider Ownership of Genuine Parts
The definition of an insider may differ slightly from country to country, but board members still matter. Management is ultimately responsible to the board of directors. However, it is not uncommon for managers to be members of the management board, especially if they are founders or CEOs.
Insider ownership is positive when it signals that executives think like the true owners of the company. However, strong insider ownership can also give immense power to a small group within the company. This can be negative in certain circumstances.
Our information suggests that Genuine Parts Company insiders own less than 1% of the company. It’s a very big company, so it would be surprising to see insiders owning much of the company. Although their stake is less than 1%, we can see that the board members collectively own $37 million worth of stock (at today’s prices). Arguably, recent purchases and sales are equally important to consider. You can click here to see if insiders have been buying or selling.
General public property
With a 22% stake, the general public, consisting mostly of individual investors, has some influence over the original coins. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.
It is always useful to think about the different groups that own shares in a company. But to better understand genuine parts, we need to consider many other factors. To this end, you should be aware of the 1 warning sign we spotted with stock parts.
If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.
NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.