Smurfit Westrock Plc's (NYSE:SW) large institutional owners must be happy as stock continues to impress, up 5.8% over the past week

Key Insights

• Institutions' substantial holdings in Smurfit Westrock implies that they have significant influence over the company's share price
• 51% of the business is held by the top 15 shareholders
• Insiders have been selling lately

To get a sense of who is truly in control of Smurfit Westrock Plc (NYSE:SW), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 84% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

Last week’s 5.8% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 41%.

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

See our latest analysis for Smurfit Westrock

What Does The Institutional Ownership Tell Us About Smurfit Westrock?

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.

We can see that Smurfit Westrock does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Smurfit Westrock's historic earnings and revenue below, but keep in mind there's always more to the story.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Smurfit Westrock is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 15% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 7.8% of common stock, and Norges Bank Investment Management holds about 4.8% of the company stock.

A closer look at our ownership figures suggests that the top 15 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 Smurfit Westrock

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Smurfit Westrock Plc in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$11m of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 16% 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:

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. Consider for instance, the ever-present spectre of investment risk. We've identified 6 warning signs with Smurfit Westrock (at least 3 which are a bit unpleasant) , and understanding them should be part of your investment process.

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.