Individual investors who have a significant stake must be disappointed along with institutions after The Bank of Nova Scotia's (TSE:BNS) market cap dropped by CA$2.7b

Key Insights

• Bank of Nova Scotia's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 25 shareholders own 37% of the company
• Institutional ownership in Bank of Nova Scotia is 49%

Every investor in The Bank of Nova Scotia (TSE:BNS) should be aware of the most powerful shareholder groups. With 51% stake, individual investors possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While the holdings of individual investors took a hit after last week’s 3.9% price drop, institutions with their 49% holdings also suffered.

Let's delve deeper into each type of owner of Bank of Nova Scotia, beginning with the chart below.

Check out our latest analysis for Bank of Nova Scotia

What Does The Institutional Ownership Tell Us About Bank of Nova Scotia?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Bank of Nova Scotia does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Bank of Nova Scotia, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Bank of Nova Scotia. BMO Asset Management Corp. is currently the company's largest shareholder with 6.9% of shares outstanding. Royal Bank of Canada, Banking & Securities Investments is the second largest shareholder owning 4.1% of common stock, and The Vanguard Group, Inc. holds about 3.7% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Bank of Nova Scotia

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 The Bank of Nova Scotia. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CA$16m of stock. 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, who are usually individual investors, hold a substantial 51% stake in Bank of Nova Scotia, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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. 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 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.