While institutions invested in ABB Ltd (VTX:ABBN) benefited from last week's 3.3% gain, individual investors stood to gain the most

Key Insights

• ABB's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 42% of the business is held by the top 25 shareholders
• Insiders have sold recently

If you want to know who really controls ABB Ltd (VTX:ABBN), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While individual investors were the group that reaped the most benefits after last week’s 3.3% price gain, institutions also received a 36% cut.

In the chart below, we zoom in on the different ownership groups of ABB.

Check out our latest analysis for ABB

What Does The Institutional Ownership Tell Us About ABB?

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.

We can see that ABB does have institutional investors; and they hold a good portion of the company's stock. 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 ABB's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in ABB. Investor AB (publ) is currently the largest shareholder, with 14% of shares outstanding. With 5.8% and 5.1% of the shares outstanding respectively, BlackRock, Inc. and UBS Asset Management AG are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. 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 ABB

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 data suggests that insiders own under 1% of ABB Ltd in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CHF88m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 49% stake in ABB. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 14%, private equity firms could influence the ABB board. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand ABB better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for ABB you should be aware of.

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.