What Is The Ownership Structure Like For Archer-Daniels-Midland Company (NYSE:ADM)?

By
Simply Wall St
Published
January 22, 2022
NYSE:ADM
Source: Shutterstock

Every investor in Archer-Daniels-Midland Company (NYSE:ADM) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.

Archer-Daniels-Midland is a pretty big company. It has a market capitalization of US$39b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Archer-Daniels-Midland.

Check out our latest analysis for Archer-Daniels-Midland

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NYSE:ADM Ownership Breakdown January 22nd 2022

What Does The Institutional Ownership Tell Us About Archer-Daniels-Midland?

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.

Archer-Daniels-Midland 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 Archer-Daniels-Midland, (below). Of course, keep in mind that there are other factors to consider, too.

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NYSE:ADM Earnings and Revenue Growth January 22nd 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Archer-Daniels-Midland. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 10% of shares outstanding. State Farm Insurance Companies, Asset Management Arm is the second largest shareholder owning 8.4% of common stock, and BlackRock, Inc. holds about 7.1% of the company stock.

A closer look at our ownership figures suggests that the top 11 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 Archer-Daniels-Midland

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. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of Archer-Daniels-Midland Company. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$142m of stock. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Archer-Daniels-Midland. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Archer-Daniels-Midland better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Archer-Daniels-Midland .

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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