Stock Analysis

With 60% ownership, Pembina Pipeline Corporation (TSE:PPL) boasts of strong institutional backing

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TSX:PPL
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Key Insights

  • Institutions' substantial holdings in Pembina Pipeline implies that they have significant influence over the company's share price
  • The top 25 shareholders own 41% of the company
  • Recent purchases by insiders

Every investor in Pembina Pipeline Corporation (TSE:PPL) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 60% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's take a closer look to see what the different types of shareholders can tell us about Pembina Pipeline.

Check out our latest analysis for Pembina Pipeline

ownership-breakdown
TSX:PPL Ownership Breakdown February 21st 2024

What Does The Institutional Ownership Tell Us About Pembina Pipeline?

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

As you can see, institutional investors have a fair amount of stake in Pembina Pipeline. 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 Pembina Pipeline, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:PPL Earnings and Revenue Growth February 21st 2024

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Pembina Pipeline. Our data shows that RBC Dominion Securities Inc., Asset Management Arm is the largest shareholder with 4.4% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.9% and 3.7%, of the shares outstanding, respectively.

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.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Pembina Pipeline

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 information suggests that Pembina Pipeline Corporation insiders own under 1% of the company. 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 CA$21m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 40% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Pembina Pipeline better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 3 warning signs for Pembina Pipeline 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.

Valuation is complex, but we're helping make it simple.

Find out whether Pembina Pipeline is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.