Knorr-Bremse AG's (ETR:KBX) market cap touched €14b last week, benefiting both private companies who own 59% as well as institutions

Key Insights

• Significant control over Knorr-Bremse by private companies implies that the general public has more power to influence management and governance-related decisions
• Stella VermÖGensverwaltungs- GmbH owns 59% of the company
• Institutional ownership in Knorr-Bremse is 23%

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If you want to know who really controls Knorr-Bremse AG (ETR:KBX), 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 59% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 4.6% increase in the stock price last week, private companies profited the most, but institutions who own 23% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Knorr-Bremse.

Check out our latest analysis for Knorr-Bremse

What Does The Institutional Ownership Tell Us About Knorr-Bremse?

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.

Knorr-Bremse 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. 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 Knorr-Bremse, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Knorr-Bremse. The company's largest shareholder is Stella VermÖGensverwaltungs- GmbH, with ownership of 59%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Massachusetts Financial Services Company is the second largest shareholder owning 3.0% of common stock, and Norges Bank Investment Management holds about 2.5% of the company stock.

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 Knorr-Bremse

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We note our data does not show any board members holding shares, personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.

General Public Ownership

With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Knorr-Bremse. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 59%, of the Knorr-Bremse stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. Take risks for example - Knorr-Bremse has 1 warning sign we think you should be aware of.

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.

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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.