Institutional investors in Berkshire Hathaway Inc. (NYSE:BRK.A) lost 3.9% last week but have reaped the benefits of longer-term growth

Key Insights

• Given the large stake in the stock by institutions, Berkshire Hathaway's stock price might be vulnerable to their trading decisions
• The top 14 shareholders own 50% of the company
• Insider ownership in Berkshire Hathaway is 15%

A look at the shareholders of Berkshire Hathaway Inc. (NYSE:BRK.A) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 65% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors endured the highest losses after the company's market cap fell by US$40b last week. However, the 23% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

In the chart below, we zoom in on the different ownership groups of Berkshire Hathaway.

Check out our latest analysis for Berkshire Hathaway

What Does The Institutional Ownership Tell Us About Berkshire Hathaway?

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.

Berkshire Hathaway 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. 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 Berkshire Hathaway, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Berkshire Hathaway is not owned by hedge funds. With a 14% stake, CEO Warren Buffett is the largest shareholder. The Vanguard Group, Inc. is the second largest shareholder owning 6.9% of common stock, and Motley Fool Asset Management, LLC holds about 6.7% of the company stock.

After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Berkshire Hathaway

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.

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.

It seems insiders own a significant proportion of Berkshire Hathaway Inc.. Insiders own US$147b worth of shares in the US$990b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Berkshire Hathaway. 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 Berkshire Hathaway better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Berkshire Hathaway 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. 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.