Norwegian Cruise Line Holdings Ltd.'s (NYSE:NCLH) high institutional ownership speaks for itself as stock continues to impress, up 4.5% over last week

Key Insights

• Given the large stake in the stock by institutions, Norwegian Cruise Line Holdings' stock price might be vulnerable to their trading decisions
• The top 14 shareholders own 51% of the company
• Insiders have been selling lately

If you want to know who really controls Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 75% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And things are looking up for institutional investors after the company gained US$514m in market cap last week. The one-year return on investment is currently 56% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Norwegian Cruise Line Holdings.

See our latest analysis for Norwegian Cruise Line Holdings

What Does The Institutional Ownership Tell Us About Norwegian Cruise Line Holdings?

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 Norwegian Cruise Line Holdings. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Norwegian Cruise Line Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Norwegian Cruise Line Holdings is not owned by hedge funds. The Vanguard Group, Inc. is currently the largest shareholder, with 12% of shares outstanding. In comparison, the second and third largest shareholders hold about 12% and 6.4% of the stock.

A closer look at our ownership figures suggests that the top 14 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Norwegian Cruise Line Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 less than 1% of Norwegian Cruise Line Holdings Ltd.. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own US$74m 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 24% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Norwegian Cruise Line Holdings. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Norwegian Cruise Line Holdings is showing 2 warning signs in our investment analysis , and 1 of those is significant...

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.