Is Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) Popular Amongst Institutions?

By
Simply Wall St
Published
March 30, 2021
NYSE:RBA

A look at the shareholders of Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) can tell us which group is most powerful. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Companies that have been privatized tend to have low insider ownership.

With a market capitalization of US$6.5b, Ritchie Bros. Auctioneers is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. In the chart below, we can see that institutions own shares in the company. Let's take a closer look to see what the different types of shareholders can tell us about Ritchie Bros. Auctioneers.

View our latest analysis for Ritchie Bros. Auctioneers

ownership-breakdown
NYSE:RBA Ownership Breakdown March 30th 2021

What Does The Institutional Ownership Tell Us About Ritchie Bros. Auctioneers?

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.

We can see that Ritchie Bros. Auctioneers does have institutional investors; and they hold a good portion of the company's stock. 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 Ritchie Bros. Auctioneers, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:RBA Earnings and Revenue Growth March 30th 2021

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Ritchie Bros. Auctioneers. The company's largest shareholder is MFS Investment Management, Inc., with ownership of 10.0%. With 5.7% and 4.9% of the shares outstanding respectively, Janus Henderson Group plc and Baillie Gifford & Co. are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 15 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 Ritchie Bros. Auctioneers

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.

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 Ritchie Bros. Auctioneers Incorporated insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$9.8m 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 16% ownership, the general public have some degree of sway over Ritchie Bros. Auctioneers. 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 Ritchie Bros. Auctioneers better, we need to consider many other factors. Take risks for example - Ritchie Bros. Auctioneers has 2 warning signs we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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. 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.
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