While institutions own 42% of Rheinmetall AG (ETR:RHM), retail investors are its largest shareholders with 58% ownership

Key Insights

• The considerable ownership by retail investors in Rheinmetall indicates that they collectively have a greater say in management and business strategy
• 36% of the business is held by the top 25 shareholders
• Institutions own 42% of Rheinmetall

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A look at the shareholders of Rheinmetall AG (ETR:RHM) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 58% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, institutions make up 42% of the company’s shareholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

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

See our latest analysis for Rheinmetall

What Does The Institutional Ownership Tell Us About Rheinmetall?

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.

We can see that Rheinmetall does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Rheinmetall's earnings history below. Of course, the future is what really matters.

Rheinmetall is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 5.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 4.0% and 3.8%, of the shares outstanding, respectively.

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.

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 Rheinmetall

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.

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.

We note our data does not show any board members holding shares, personally. Given we are not picking up on insider ownership, we may have missing data. Therefore, it would be interesting to assess the CEO compensation and tenure, here.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 58% of Rheinmetall shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Rheinmetall better, we need to consider many other factors. Take risks for example - Rheinmetall has 1 warning sign we think you should be aware of.

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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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.