Bayer CropScience Limited's (NSE:BAYERCROP) stock price dropped 3.5% last week; public companies would not be happy

Key Insights

• Significant control over Bayer CropScience by public companies implies that the general public has more power to influence management and governance-related decisions
• Bayer Aktiengesellschaft owns 56% of the company
• 14% of Bayer CropScience is held by Institutions

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Every investor in Bayer CropScience Limited (NSE:BAYERCROP) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 56% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 3.5% decline in share price, public companies suffered the most losses.

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

See our latest analysis for Bayer CropScience

What Does The Institutional Ownership Tell Us About Bayer CropScience?

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.

As you can see, institutional investors have a fair amount of stake in Bayer CropScience. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Bayer CropScience's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Bayer CropScience. Bayer Aktiengesellschaft is currently the company's largest shareholder with 56% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Mirae Asset Global Investments Co., Ltd. is the second largest shareholder owning 3.0% of common stock, and quant Money Managers Ltd. holds about 2.4% of the company 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Bayer CropScience

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our data suggests that insiders own under 1% of Bayer CropScience Limited in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. Keep in mind that it's a big company, and the insiders own ₹2.4m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 28% stake in Bayer CropScience. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Public Company Ownership

It appears to us that public companies own 56% of Bayer CropScience. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Bayer CropScience better, we need to consider many other factors. For instance, we've identified 1 warning sign for Bayer CropScience that you should be aware of.

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.

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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.