In the wake of Ryman Healthcare Limited's (NZSE:RYM) latest NZ$171m market cap drop, institutional owners may be forced to take severe actions

Key Insights

• Significantly high institutional ownership implies Ryman Healthcare's stock price is sensitive to their trading actions
• The top 11 shareholders own 52% of the company
• Insiders have been selling lately

A look at the shareholders of Ryman Healthcare Limited (NZSE:RYM) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to NZ$3.1b last week after a 5.3% drop in the share price. The recent loss, which adds to a one-year loss of 25% for stockholders, may not sit well with this group of investors. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Ryman Healthcare which might hurt individual investors.

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

Check out our latest analysis for Ryman Healthcare

What Does The Institutional Ownership Tell Us About Ryman Healthcare?

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

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Ryman Healthcare. Karori Capital Limited is currently the company's largest shareholder with 7.7% of shares outstanding. With 6.5% and 6.4% of the shares outstanding respectively, Cooper Investors Pty Limited and Forsyth Barr Investment Management Limited are the second and third largest shareholders.

After doing some more digging, we found that the top 11 have the combined ownership of 52% in the company, suggesting that no single shareholder has significant control over the company.

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 Ryman Healthcare

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 see that insiders own shares in Ryman Healthcare Limited. The insiders have a meaningful stake worth NZ$151m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Ryman Healthcare. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ryman Healthcare better, we need to consider many other factors. Take risks for example - Ryman Healthcare 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.