With 44% ownership in Quad/Graphics, Inc. (NYSE:QUAD), institutional investors have a lot riding on the business

Key Insights

• Significantly high institutional ownership implies Quad/Graphics' stock price is sensitive to their trading actions
• A total of 7 investors have a majority stake in the company with 50% ownership
• Insider ownership in Quad/Graphics is 12%

Every investor in Quad/Graphics, Inc. (NYSE:QUAD) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 44% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, institutional investors ended up benefitting the most after the company hit US$352m in market cap. The one-year return on investment is currently 49% and last week's gain would have been more than welcomed.

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

See our latest analysis for Quad/Graphics

What Does The Institutional Ownership Tell Us About Quad/Graphics?

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.

Quad/Graphics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Quad/Graphics' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Quad/Graphics. The company's largest shareholder is Quad/graphics, Inc. Voting Trust, with ownership of 24%. In comparison, the second and third largest shareholders hold about 5.6% and 4.9% of the stock. J. Quadracci, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

We also observed that the top 7 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Quad/Graphics

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.

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 information suggests that insiders maintain a significant holding in Quad/Graphics, Inc.. Insiders own US$41m worth of shares in the US$352m company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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 Quad/Graphics better, we need to consider many other factors. For instance, we've identified 1 warning sign for Quad/Graphics 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.