Swisscom AG's (VTX:SCMN) market cap dropped CHF1.2b last week; State or government bore the brunt

Key Insights

• Swisscom's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• Switzerland owns 51% of the company
• Institutions own 17% of Swisscom

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

To get a sense of who is truly in control of Swisscom AG (VTX:SCMN), it is important to understand the ownership structure of the business. With 51% stake, state or government possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And last week, state or government endured the biggest losses as the stock fell by 4.2%.

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

View our latest analysis for Swisscom

What Does The Institutional Ownership Tell Us About Swisscom?

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 Swisscom 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Swisscom's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Swisscom. The company's largest shareholder is Switzerland, with ownership of 51%. This implies that they have majority interest control of the future of the company. In comparison, the second and third largest shareholders hold about 3.5% and 2.5% of the stock.

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. 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 Swisscom

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 most recent data indicates that insiders own less than 1% of Swisscom AG. 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 CHF7.8m worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 32% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Swisscom you should know about.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.