HSBC Holdings plc (LON:HSBA) is favoured by institutional owners who hold 54% of the company

editorial-team@simplywallst.com (Simply Wall St)

Fri, Dec 1, 2023, 12:16 AM 4 min read

What Does The Institutional Ownership Tell Us About HSBC Holdings?

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 HSBC Holdings 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 HSBC Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth — LSE:HSBA Earnings and Revenue Growth December 1st 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. HSBC Holdings is not owned by hedge funds. Our data shows that Ping'an Assets Management Co., Ltd. is the largest shareholder with 8.6% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.2% of common stock, and The Vanguard Group, Inc. holds about 4.7% of the company stock.

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.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of HSBC Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 HSBC Holdings plc in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own UK£53m of stock. 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 45% stake in HSBC Holdings. 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 HSBC Holdings better, we need to consider many other factors. To that end, you should learn about the 2 warning signs we've spotted with HSBC Holdings (including 1 which can't be ignored) .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.