After losing 10% in the past year, Illinois Tool Works Inc. (NYSE:ITW) institutional owners must be relieved by the recent gain

By
Simply Wall St
Published
May 10, 2022
NYSE:ITW
Source: Shutterstock

If you want to know who really controls Illinois Tool Works Inc. (NYSE:ITW), then you'll have to look at the makeup of its share registry. With 82% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

After a year of 10% losses, last week’s 4.7% gain would be welcomed by institutional investors as a likely sign that returns might start trending higher.

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

Check out our latest analysis for Illinois Tool Works

ownership-breakdown
NYSE:ITW Ownership Breakdown May 10th 2022

What Does The Institutional Ownership Tell Us About Illinois Tool Works?

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 Illinois Tool Works. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Illinois Tool Works, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:ITW Earnings and Revenue Growth May 10th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Illinois Tool Works. Briar Hall Management LLC is currently the largest shareholder, with 8.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.2% and 6.9%, of the shares outstanding, respectively.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Illinois Tool Works

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 data suggests that insiders own under 1% of Illinois Tool Works Inc. in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$200m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Illinois Tool Works. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Illinois Tool Works has 1 warning sign we think 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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