Retail investors who have a significant stake must be disappointed along with institutions after Givaudan SA's (VTX:GIVN) market cap dropped by CHF2.6b

Key Insights

• Significant control over Givaudan by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 25 shareholders own 40% of the company
• Institutional ownership in Givaudan is 46%

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Every investor in Givaudan SA (VTX:GIVN) should be aware of the most powerful shareholder groups. With 54% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While the holdings of retail investors took a hit after last week’s 8.3% price drop, institutions with their 46% holdings also suffered.

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

View our latest analysis for Givaudan

What Does The Institutional Ownership Tell Us About Givaudan?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Givaudan already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Givaudan's historic earnings and revenue below, but keep in mind there's always more to the story.

Givaudan is not owned by hedge funds. Our data shows that Cascade Investment, L.L.C. is the largest shareholder with 12% of shares outstanding. For context, the second largest shareholder holds about 5.7% of the shares outstanding, followed by an ownership of 5.1% by the third-largest shareholder.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Givaudan

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 Givaudan SA insiders own under 1% of the company. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own CHF37m 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, mostly comprising of individual investors, collectively holds 54% of Givaudan shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

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. Case in point: We've spotted 1 warning sign for Givaudan you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.