Following a 8.5% decline over last year, recent gains may please QUALCOMM Incorporated (NASDAQ:QCOM) institutional owners

Simply Wall St

Sat, Jul 29, 2023, 5:00 AM 4 min read

If you want to know who really controls QUALCOMM Incorporated (NASDAQ:QCOM), 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 75% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's US$5.3b market cap gain would probably be appreciated by institutional investors, especially after a year of 8.5% losses.

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

View our latest analysis for QUALCOMM

ownership-breakdown — NasdaqGS:QCOM Ownership Breakdown July 29th 2023

What Does The Institutional Ownership Tell Us About QUALCOMM?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that QUALCOMM does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of QUALCOMM, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — NasdaqGS:QCOM Earnings and Revenue Growth July 29th 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in QUALCOMM. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 9.9% of shares outstanding. For context, the second largest shareholder holds about 7.5% of the shares outstanding, followed by an ownership of 4.4% by the third-largest shareholder.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of QUALCOMM

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of QUALCOMM Incorporated in their own names. 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$169m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over QUALCOMM. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for QUALCOMM (1 doesn't sit too well with us) that you should be aware of.

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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