With 73% ownership in Brookfield Asset Management Ltd. (TSE:BAM), institutional investors have a lot riding on the business

Key Insights

• Significantly high institutional ownership implies Brookfield Asset Management's stock price is sensitive to their trading actions
• 50% of the business is held by the top 14 shareholders
• Insiders have been selling lately

A look at the shareholders of Brookfield Asset Management Ltd. (TSE:BAM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 73% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 3.4% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 44%.

Let's delve deeper into each type of owner of Brookfield Asset Management, beginning with the chart below.

Check out our latest analysis for Brookfield Asset Management

What Does The Institutional Ownership Tell Us About Brookfield Asset Management?

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 Brookfield Asset Management does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Brookfield Asset Management's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Brookfield Asset Management. Capital Research and Management Company is currently the company's largest shareholder with 9.6% of shares outstanding. For context, the second largest shareholder holds about 7.3% of the shares outstanding, followed by an ownership of 4.9% by the third-largest shareholder. Additionally, the company's CEO James Flatt directly holds 3.7% of the total shares outstanding.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 50% implying that no single shareholder 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Brookfield Asset Management

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own some shares in Brookfield Asset Management Ltd.. The insiders have a meaningful stake worth CA$2.2b. we sometimes take an interest in whether they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 18% stake in Brookfield Asset Management. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Brookfield Asset Management (of which 2 are a bit concerning!) you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.