Painful week for retail investors invested in Bayer Aktiengesellschaft (ETR:BAYN) after 4.4% drop, institutions also suffered losses

Key Insights

• Significant control over Bayer by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 25 investors have a majority stake in the company with 34% ownership
• Institutions own 41% of Bayer

A look at the shareholders of Bayer Aktiengesellschaft (ETR:BAYN) can tell us which group is most powerful. We can see that retail investors own the lion's share in the company with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions, who own 41% shares weren’t spared from last week’s €1.3b market cap drop, retail investors as a group suffered the maximum losses

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

See our latest analysis for Bayer

What Does The Institutional Ownership Tell Us About Bayer?

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.

Bayer 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. 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 Bayer's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Bayer. The company's largest shareholder is BlackRock, Inc., with ownership of 4.8%. In comparison, the second and third largest shareholders hold about 3.9% and 3.0% of the stock.

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 Bayer

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.

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

The general public, mostly comprising of individual investors, collectively holds 59% of Bayer 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 2 warning signs for Bayer 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.