Stock Analysis

With 88% ownership of the shares, Global Payments Inc. (NYSE:GPN) is heavily dominated by institutional owners

NYSE:GPN
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Key Insights

  • Given the large stake in the stock by institutions, Global Payments' stock price might be vulnerable to their trading decisions
  • 51% of the business is held by the top 17 shareholders
  • Recent sales by insiders

To get a sense of who is truly in control of Global Payments Inc. (NYSE:GPN), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 88% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

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. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let's delve deeper into each type of owner of Global Payments, beginning with the chart below.

See our latest analysis for Global Payments

ownership-breakdown
NYSE:GPN Ownership Breakdown October 9th 2023

What Does The Institutional Ownership Tell Us About Global Payments?

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.

Global Payments already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Global Payments, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:GPN Earnings and Revenue Growth October 9th 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Global Payments is not owned by hedge funds. The Vanguard Group, Inc. is currently the largest shareholder, with 9.8% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.1% and 4.8% of the stock.

After doing some more digging, we found that the top 17 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Global Payments

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

Our most recent data indicates that insiders own less than 1% of Global Payments Inc.. 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$263m worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Global Payments. 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:

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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Global Payments (of which 1 is a bit concerning!) 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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Find out whether Global Payments is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.