Institutional owners may ignore United Natural Foods, Inc.'s (NYSE:UNFI) recent US$188m market cap decline as longer-term profits stay in the green

By
Simply Wall St
Published
February 23, 2022
NYSE:UNFI
Source: Shutterstock

A look at the shareholders of United Natural Foods, Inc. (NYSE:UNFI) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 77% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Losing money on investments is something no shareholder enjoys, least of all institutional investors who saw their holdings value drop by 7.8% last week. However, the 43% one-year return to shareholders may have helped lessen their pain. They should, however, be mindful of further losses in the future.

Let's take a closer look to see what the different types of shareholders can tell us about United Natural Foods.

See our latest analysis for United Natural Foods

ownership-breakdown
NYSE:UNFI Ownership Breakdown February 23rd 2022

What Does The Institutional Ownership Tell Us About United Natural Foods?

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 United Natural Foods. 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 United Natural Foods, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:UNFI Earnings and Revenue Growth February 23rd 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. It looks like hedge funds own 5.2% of United Natural Foods shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. BlackRock, Inc. is currently the company's largest shareholder with 15% of shares outstanding. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 6.7% by the third-largest shareholder.

On further inspection, we found that more than half the company's shares are owned by the top 10 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of United Natural Foods

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 United Natural Foods, Inc.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$33m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that United Natural Foods is showing 4 warning signs in our investment analysis , you should know about...

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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