T. Rowe Price Group, Inc. (NASDAQ:TROW) is largely controlled by institutional shareholders who own 73% of the company

By
Simply Wall St
Published
April 20, 2022
NasdaqGS:TROW
Source: Shutterstock

A look at the shareholders of T. Rowe Price Group, Inc. (NASDAQ:TROW) can tell us which group is most powerful. The group holding the most number of shares in the company, around 73% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.

Let's delve deeper into each type of owner of T. Rowe Price Group, beginning with the chart below.

View our latest analysis for T. Rowe Price Group

ownership-breakdown
NasdaqGS:TROW Ownership Breakdown April 20th 2022

What Does The Institutional Ownership Tell Us About T. Rowe Price Group?

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 T. Rowe Price Group. 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. 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 T. Rowe Price Group's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:TROW Earnings and Revenue Growth April 20th 2022

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. T. Rowe Price Group is not owned by hedge funds. The Vanguard Group, Inc. is currently the largest shareholder, with 8.6% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.3% and 5.3%, of the shares outstanding, respectively.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 T. Rowe Price Group

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. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Shareholders would probably be interested to learn that insiders own shares in T. Rowe Price Group, Inc.. The insiders have a meaningful stake worth US$669m. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand T. Rowe Price Group better, we need to consider many other factors. For example, we've discovered 2 warning signs for T. Rowe Price Group that you should be aware of before investing here.

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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