Could The Australia and New Zealand Banking Group Limited (ASX:ANZ) Ownership Structure Tell Us Something Useful?

The big shareholder groups in Australia and New Zealand Banking Group Limited (ASX:ANZ) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Companies that used to be publicly owned tend to have lower insider ownership.

With a market capitalization of AU$54b, Australia and New Zealand Banking Group is rather large. We’d expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. Taking a look at our data on the ownership groups (below), it’s seems that institutions own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about Australia and New Zealand Banking Group.

Check out our latest analysis for Australia and New Zealand Banking Group

ASX:ANZ Ownership Summary June 13th 2020
ASX:ANZ Ownership Summary June 13th 2020

What Does The Institutional Ownership Tell Us About Australia and New Zealand Banking Group?

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.

Australia and New Zealand Banking Group already has institutions on the share registry. Indeed, they own 25% of the company. 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Australia and New Zealand Banking Group’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

ASX:ANZ Income Statement June 13th 2020
ASX:ANZ Income Statement June 13th 2020

Hedge funds don’t have many shares in Australia and New Zealand Banking Group. BlackRock, Inc. is currently the largest shareholder, with 6.1% of shares outstanding. With 6.0% and 1.4% of the shares outstanding respectively, The Vanguard Group, Inc. and Norges Bank Investment Management are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Australia and New Zealand Banking Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 most recent data indicates that insiders own less than 1% of Australia and New Zealand Banking Group Limited. As it is a large company, we’d only expect insiders to own a small percentage of it. But it’s worth noting that they own AU$20m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, mostly retail investors, hold a substantial 74% stake in ANZ, suggesting it is a fairly popular stock. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks, for example – Australia and New Zealand Banking Group has 3 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

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This article by Simply Wall St is general in nature. 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. Thank you for reading.