British American Tobacco p.l.c. (LON:BATS) is a favorite amongst institutional investors who own 76%

By
Simply Wall St
Published
December 05, 2021
LSE:BATS
Source: Shutterstock

A look at the shareholders of British American Tobacco p.l.c. (LON:BATS) can tell us which group is most powerful. The group holding the most number of shares in the company, around 76% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.

Let's delve deeper into each type of owner of British American Tobacco, beginning with the chart below.

Check out our latest analysis for British American Tobacco

ownership-breakdown
LSE:BATS Ownership Breakdown December 6th 2021

What Does The Institutional Ownership Tell Us About British American Tobacco?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in British American Tobacco. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 British American Tobacco's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
LSE:BATS Earnings and Revenue Growth December 6th 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. British American Tobacco is not owned by hedge funds. Our data shows that Capital Research and Management Company is the largest shareholder with 12% of shares outstanding. With 8.2% and 8.0% of the shares outstanding respectively, Kenneth Dart and BlackRock, Inc. are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of British American Tobacco

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 can report that insiders do own shares in British American Tobacco p.l.c.. Insiders own UK£4.9b worth of shares (at current prices). we sometimes take an interest in whether they have been buying or selling.

General Public Ownership

With a 16% ownership, the general public, mostly comprising of individual investors, have some degree of sway over British American Tobacco. 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. To that end, you should learn about the 2 warning signs we've spotted with British American Tobacco (including 1 which shouldn't be ignored) .

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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