Key findings

• Significantly high institutional ownership implies that Analog Devices’ share price is sensitive to their trading activities

• 50% of the company is owned by the 23 largest shareholders

• Current sales by insiders

To get a sense of who really has control of Analog Devices, Inc. (NASDAQ:ADI), it is important to understand the ownership structure of the company. With 89% of the shares, institutions own the most shares in the company. That means the group benefits the most when the stock rises (or loses the most when there is a downturn).

And last week, institutional investors benefited the most after the company reached a market capitalization of $111 billion. The return to shareholders is currently 29% and last week’s gain was the icing on the cake.

Let’s take a closer look at what the different shareholder types can tell us about Analog Devices.

Check out our latest analysis for Analog Devices

What does institutional ownership tell us about Analog Devices?

Institutional investors often compare their own returns to those of a commonly followed index, so they typically consider buying larger companies included in the relevant benchmark index.

We can see that Analog Devices has institutional investors; and they hold a large portion of the company’s shares. This may indicate that the company enjoys a certain level of trust in the investment community. However, one should be wary of relying on the supposed validation that institutional investors bring. Even they are sometimes wrong. When multiple institutions own a stock, there is always a risk that they are involved in a “crowd trade.” If such a trade goes wrong, multiple parties may be competing to sell the shares quickly. This risk is higher with a company without a history of growth. You can see Analog Devices’ historical earnings and revenue below, but keep in mind there’s always more to the story.

Institutional investors own over 50% of the company, so together they can probably exert a strong influence on the board’s decisions. Hedge funds do not own a lot of Analog Devices. Vanguard Group, Inc. is currently the largest shareholder with 9.7% of the shares outstanding. BlackRock, Inc. and State Street Global Advisors, Inc. are the second and third largest shareholders with 8.0% and 4.5% of the shares outstanding, respectively.

A closer look at our ownership figures suggests that the top 23 shareholders together own 50%, meaning no single shareholder has a majority.

While studying institutional ownership of a company can enrich your research, it is also a good practice to research analyst recommendations to get a deeper understanding of a stock’s expected performance. There are a considerable number of analysts covering the stock, so it could be useful to find out their overall view on the future.

The story continues

Insider ownership of Analog Devices

The definition of corporate insiders can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management is ultimately accountable to the board. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Most people consider insider ownership to be a positive because it can indicate that the board is well aligned with other shareholders. However, sometimes too much power is concentrated in this group.

According to our information, Analog Devices, Inc. insiders own less than 1% of the company. Since it’s a large company, we would only expect insiders to own a small percentage of it. However, it’s worth noting that they own US$441 million worth of shares. It’s good to see board members own shares, but it might be worth checking to see if those insiders have been buying.

Public property

The general public – including retail investors – owns 10% of the company’s shares and therefore cannot be easily ignored. While this level of ownership may not be enough to sway a political decision in their favor, they can still collectively influence company policy.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Analog Devices, we need to consider many other factors. Consider, for example, the ever-present specter of investment risk. We have identified 1 warning signal with Analog Devices, and understanding them should be part of your investment process.

But ultimately It is the futurenot the past, will determine how well the owners of this company will perform, so we think it wise to take a look at this free report showing whether analysts are predicting a better future.

NB: The figures in this article are calculated using the last twelve months’ data, which refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the annual report.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.