With 87% ownership, O'Reilly Automotive, Inc. (NASDAQ:ORLY) boasts of strong institutional backing

Key Insights

• Institutions' substantial holdings in O'Reilly Automotive implies that they have significant influence over the company's share price
• The top 25 shareholders own 51% of the company
• Insiders have been selling lately

A look at the shareholders of O'Reilly Automotive, Inc. (NASDAQ:ORLY) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 87% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's take a closer look to see what the different types of shareholders can tell us about O'Reilly Automotive.

View our latest analysis for O'Reilly Automotive

What Does The Institutional Ownership Tell Us About O'Reilly Automotive?

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 O'Reilly Automotive. 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 O'Reilly Automotive, (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. We note that hedge funds don't have a meaningful investment in O'Reilly Automotive. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 8.9% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 7.0% of common stock, and State Street Global Advisors, Inc. holds about 4.2% of the company stock.

After doing some more digging, we found that the top 25 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of O'Reilly Automotive

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 data suggests that insiders own under 1% of O'Reilly Automotive, Inc. in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$615m 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

With a 12% ownership, the general public, mostly comprising of individual investors, have some degree of sway over O'Reilly Automotive. 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:

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. For example, we've discovered 3 warning signs for O'Reilly Automotive (1 makes us a bit uncomfortable!) 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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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.