Koninklijke DSM N.V.'s (AMS:DSM) institutional investors lost 5.8% last week but have benefitted from longer-term gains

By
Simply Wall St
Published
January 17, 2022
ENXTAM:DSM
Source: Shutterstock

To get a sense of who is truly in control of Koninklijke DSM N.V. (AMS:DSM), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 50% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutional investors endured the highest losses after the company's market cap fell by €1.9b last week. Still, the 26% one-year gains may have helped mitigate their overall losses. But they would probably be wary of future losses.

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

See our latest analysis for Koninklijke DSM

ownership-breakdown
ENXTAM:DSM Ownership Breakdown January 17th 2022

What Does The Institutional Ownership Tell Us About Koninklijke DSM?

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

earnings-and-revenue-growth
ENXTAM:DSM Earnings and Revenue Growth January 17th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Koninklijke DSM is not owned by hedge funds. BlackRock, Inc. is currently the largest shareholder, with 4.0% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.8% and 3.5%, of the shares outstanding, respectively.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Koninklijke DSM

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. 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.

Our most recent data indicates that insiders own less than 1% of Koninklijke DSM N.V.. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own €41m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 50% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Koninklijke DSM. 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.

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.

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

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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