Institutional owners may consider drastic measures as Fresenius Medical Care AG’s (ETR:FME) recent €719 million decline adds to long-term losses.

Key ideas

• Given the significant institutional stake in the stock, Fresenius Medical Care’s stock price could be vulnerable to their business decisions.

• A total of 5 investors hold a majority stake in the company with a 52% stake.

• Property research along with analyst forecast data helps provide a good understanding of the opportunities in a stock.

A look at Fresenius Medical Care AG (ETR:FME) shareholders can tell us which group is more powerful. With 41% of the capital, institutions own the maximum share in the company. In other words, the group faces maximum upside potential (or downside risk).

As a result, institutional investors suffered the highest losses last week after a fall in market capitalization of 719 million euros. This set of investors may be particularly concerned about the current loss, which adds to a year-over-year loss of 12% for shareholders. Often referred to as “market participants,” institutions wield significant power to influence the price dynamics of any stock. Therefore, if Fresenius Medical Care’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 each Fresenius Medical Care owner type, starting with the table below.

Check out our latest analysis for Fresenius Medical Care

What does institutional ownership tell us about Fresenius Medical Care?

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 own a significant stake in Fresenius Medical Care. 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 deal 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 Fresenius Medical Care’s historic earnings and revenue below, but keep in mind there’s always more to the story.

We note that hedge funds do not have a significant investment in Fresenius Medical Care. The company’s largest shareholder is Fresenius SE & Co. KGaA, with a 32% stake. With 8.0% and 5.0% of the shares outstanding, respectively, Pzena Investment Management, Inc. and Harris Associates LP are the second and third largest shareholders.

The story continues

Our research also highlighted that approximately 52% of the company is controlled by the top five shareholders, suggesting that these owners have significant influence over the company.

While it makes sense to study data on institutional ownership of a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Many analysts cover the stock, so you can look at growth forecasts quite easily.

Preferred property of Fresenius Medical Care

Although the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. Notably, it sometimes happens that high-level executives themselves sit on the board of directors.

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 information suggests that Fresenius Medical Care AG insiders own less than 1% of the company. Given their size, we wouldn’t expect insiders to own a large proportion of the shares. Collectively, they own €2.3 million worth of shares. Perhaps just as important is taking into account recent purchases and sales. You can click here to see if insiders have been buying or selling.

General public property

The general public, typically individual investors, owns a 27% stake in Fresenius Medical Care. This size of ownership, although considerable, may not be enough to change company policy if the decision is not in line with that of other large shareholders.

Public company ownership

It appears to us that public companies own 32% of Fresenius Medical Care. It’s hard to say for sure, but it suggests they have closely related business interests. This may be a strategic issue, so it’s worth monitoring this space for changes in ownership.

Next steps:

While it’s worth considering the different groups that own a business, there are other factors that are even more important. Take risks for example – Fresenius Medical Care has 2 warning signs we think you should be aware of this.

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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