Any investor in Advanced Micro Devices, Inc. †NASDAQ:AMD) should be aware of the most powerful shareholder groups. The group with the most shares in the company, about 67% to be exact, are institutions. In other words, the group will gain (or lose the most) from their investment in the company.
As a result, institutional investors suffered the biggest losses last week after the market capitalization fell by US$8.8 billion. It goes without saying that the recent loss, which further increases the one-year loss for shareholders of 1.2%, will not go down well with this category of shareholders in particular. Institutions, often referred to as “market makers,” have significant power in influencing the price dynamics of any stock. If the downward trend continues, it could put pressure on institutions to sell high-end micro-devices, which could negatively impact individual investors.
In the diagram below we zoom in on the different ownership groups of Advanced Micro Devices.
What does institutional ownership tell us about advanced microdevices?
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.
We can see that Advanced Micro Devices has institutional investors; and they own a large portion of the company’s stock. This suggests some credibility with professional investors. But we cannot rely on that fact alone, as institutions sometimes make bad investments, just like everyone else. It is not uncommon to see a large drop in price when two large institutional investors try to sell a stock at the same time. So it’s worth checking out Advanced Micro Devices’ past earnings trajectory (below). Of course, keep in mind that there are other factors to consider as well.
Investors should keep in mind that institutions actually own more than half of the company, so they can collectively exercise significant power. We note that hedge funds have no meaningful investment in Advanced Micro Devices. Our records indicate that The Vanguard Group, Inc. is the largest shareholder with 8.2% of the outstanding shares. In comparison, the second and third largest shareholders own approximately 7.4% and 4.0% of the shares.
Our investigations show that the 25 largest shareholders collectively own less than half of the company’s stock, which means that the company’s shares are widely distributed 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 examine analysts’ recommendations to better understand a stock’s expected performance. There are quite a few analysts covering the stock, so you can look at the forecasted growth quite easily.
Insider ownership of advanced microdevices
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Ultimately, management is accountable to the board. However, it is not uncommon for managers to serve on the board of directors, especially if they are founder or CEO.
I generally consider insider ownership to be a good thing. In some cases, however, it makes it more difficult for other shareholders to hold the board accountable for decisions.
Our data shows that insiders less than 1% of Advanced Micro Devices, Inc. own in their own name. It is a very large company, so it would be surprising to see insiders own a large portion of the company. Although their stake is less than 1%, we can see that board members collectively own $572 million in shares (at current prices). It’s good to see board members owning stock, but it might be worth checking if those insiders bought.
General public property
With 32% ownership, the general public, mainly made up of individual investors, has some influence over Advanced Micro Devices. While this group may not necessarily be in charge, it can certainly have a real impact on the way the company is run.
I find it very interesting to see who exactly owns a company. But to get real insight, we need to consider other information as well. Example: we’ve seen it 2 warning signs for advanced microdevices you must be aware.
But eventually it’s the future, not the past, that will determine how well the owners of this business will do. That is why we think it is advisable to take a look at this free report shows whether analysts predict a brighter future†
NB: Figures in this article have been calculated on the basis of data from the past twelve months, which relate to the period of 12 months ending on the last day of the month in which the financial statements are dated. This may not match the figures for the full annual report.
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This article from 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 is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. We strive to provide you with long-term focused analysis powered by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no position in said stocks.