Institutional owners may consider drastic action as WW International, Inc.’s (NASDAQ:WW) recent $16 million decline adds to long-term losses.

Key ideas

• Institutions’ significant stakes in WW International imply that they have significant influence over the company’s stock price.
• The top 25 shareholders own 49% of the company
• Analyst forecasts along with ownership data are used to provide a clear picture of a company’s prospects.

Every investor in WW International, Inc. (NASDAQ: WW) should be aware of the most powerful shareholder groups. With 53% of the capital, institutions own the maximum share in the company. In other words, the group will benefit the most if the stock rises (or lose the most if the stock goes down).

And institutional investors suffered the biggest losses after the company’s stock price fell 12% last week. The recent loss, which comes on top of a 79% year-over-year loss for shareholders, may not please this group of investors. Often referred to as “market participants,” institutions wield significant power to influence the price dynamics of any stock. Therefore, if WW International’s stock price weakness persists, institutional investors may feel pressured to sell the stock, which may not be ideal for individual investors.

Let’s take a closer look at what the different types of shareholders can tell us about WW International.

Check out our latest analysis for WW International

What does institutional ownership tell us about WW International?

Many institutions measure their performance against an index that approximates the local market. So they generally pay more attention to companies included in major indexes.

As you can see, institutional investors have a significant stake in WW International. This suggests a certain credibility among professional investors. But we can’t rely on that fact alone, because institutions make bad investments sometimes, just like everyone else. When multiple institutions own a stock, there is always a risk that they may find themselves in a ‘crowded trade’. When such a trade goes bad, multiple parties may compete to sell their shares quickly. This risk is higher in a company without a history of growth. You can see WW International’s historic earnings and revenue below, but keep in mind there’s always more to the story.

Investors should note that institutions actually own more than half the company, allowing them to collectively wield significant power. Reportedly, 5.1% of WW International shares are controlled by hedge funds. This is interesting, because hedge funds can be very active and activist. Many look for medium-term catalysts that will drive the stock price higher. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 5.6% of shares outstanding. In comparison, the second and third largest shareholders hold approximately 5.3% and 5.1% of the shares.

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 stake.

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 interesting to see their forecasts as well.

Insider ownership of WW International

The definition of corporate insiders can be subjective and varies by jurisdiction. Our data reflects individual insiders, capturing board members at a minimum. Company management runs the business, but the CEO will answer to the board of directors, even if he or she is a member of it.

I generally consider internal ownership to be a good thing. However, in some cases it is more difficult for other shareholders to hold the board accountable for its decisions.

Our data suggests that insiders own less than 1% of WW International, Inc. in their own names. Its market capitalization stands at just US$114 million and the board owns only US$1.1 million worth of shares in its own name. We generally like to see a more invested board. However, it might be worth checking to see if these insiders have been buying.

General public property

The general public, who are typically individual investors, own a 40% stake in WW International. While this size of ownership may not be enough to sway a policy decision in their favor, they can still have a collective impact on company policies.

Next steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Concrete example: we spotted 2 warning signs for WW International you should be aware of them, and one of them is a bit concerning.

If you’d rather find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using data for the last twelve months, 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 entire 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 constitute financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to provide you with targeted, long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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