In the wake of Dun & Bradstreet Holdings, Inc.'s (NYSE:DNB) latest US$552m market cap drop, institutional owners may be forced to take severe actions

By
Simply Wall St
Published
November 21, 2021
NYSE:DNB
Source: Shutterstock

To get a sense of who is truly in control of Dun & Bradstreet Holdings, Inc. (NYSE:DNB), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 37% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$8.2b last week after a 6.3% drop in the share price. The recent loss, which adds to a one-year loss of 31% 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. Hence, if weakness in Dun & Bradstreet Holdings' share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Dun & Bradstreet Holdings.

View our latest analysis for Dun & Bradstreet Holdings

ownership-breakdown
NYSE:DNB Ownership Breakdown November 22nd 2021

What Does The Institutional Ownership Tell Us About Dun & Bradstreet Holdings?

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 Dun & Bradstreet Holdings. 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. 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 Dun & Bradstreet Holdings' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:DNB Earnings and Revenue Growth November 22nd 2021

Dun & Bradstreet Holdings is not owned by hedge funds. Our data shows that Cannae Holdings, Inc. is the largest shareholder with 16% of shares outstanding. With 13% and 11% of the shares outstanding respectively, Black Knight, Inc. and Thomas H. Lee Partners, L.P. are the second and third largest shareholders.

Our research also brought to light the fact that roughly 57% of the company is controlled by the top 5 shareholders suggesting that these owners wield significant influence on the business.

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 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 Dun & Bradstreet Holdings

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.

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.

Our most recent data indicates that insiders own some shares in Dun & Bradstreet Holdings, Inc.. The insiders have a meaningful stake worth US$322m. Most would say this shows a good 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 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dun & Bradstreet Holdings. 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.

Private Equity Ownership

With a stake of 27%, private equity firms could influence the Dun & Bradstreet Holdings board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

We can see that Private Companies own 8.6%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

It appears to us that public companies own 13% of Dun & Bradstreet Holdings. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should be aware of the 1 warning sign we've spotted with Dun & Bradstreet Holdings .

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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