Stock Analysis

With 3.3% one-year returns, institutional owners may ignore Canadian National Railway Company's (TSE:CNR) 4.4% stock price decline

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TSX:CNR
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If you want to know who really controls Canadian National Railway Company (TSE:CNR), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 67% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

No shareholder likes losing money on their investments, especially institutional investors who saw their holdings drop 4.4% in value last week. However, the 3.3% one-year returns may have helped alleviate their overall losses. They should, however, be mindful of further losses in the future.

In the chart below, we zoom in on the different ownership groups of Canadian National Railway.

See our latest analysis for Canadian National Railway

ownership-breakdown
TSX:CNR Ownership Breakdown September 28th 2022

What Does The Institutional Ownership Tell Us About Canadian National Railway?

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.

Canadian National Railway already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Canadian National Railway, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TSX:CNR Earnings and Revenue Growth September 28th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It looks like hedge funds own 5.4% of Canadian National Railway shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. The company's largest shareholder is Bill & Melinda Gates Foundation Asset Trust, with ownership of 8.0%. Meanwhile, the second and third largest shareholders, hold 5.4% and 3.4%, of the shares outstanding, respectively.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 25 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Canadian National Railway

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in Canadian National Railway Company. It is a very large company, and board members collectively own CA$2.1b worth of shares (at current prices). we sometimes take an interest in whether they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 26% 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:

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. Be aware that Canadian National Railway is showing 2 warning signs in our investment analysis , you should know about...

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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About TSX:CNR

Canadian National Railway

Canadian National Railway Company, together with its subsidiaries, engages in the rail and related transportation business.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation1
Future Growth2
Past Performance3
Financial Health3
Dividends4

Read more about these checks in the individual report sections or in our analysis model.

Average dividend payer with acceptable track record.