Tractor Supply Company's (NASDAQ:TSCO) institutional investors lost 7.5% over the past week but have profited from longer-term gains

By
Simply Wall St
Published
April 19, 2022
NasdaqGS:TSCO
Source: Shutterstock

Every investor in Tractor Supply Company (NASDAQ:TSCO) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 85% 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 was the group most impacted after the company's market cap fell to US$24b last week. However, the 20% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

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

View our latest analysis for Tractor Supply

ownership-breakdown
NasdaqGS:TSCO Ownership Breakdown April 19th 2022

What Does The Institutional Ownership Tell Us About Tractor Supply?

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.

Tractor Supply 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. 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 Tractor Supply's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
NasdaqGS:TSCO Earnings and Revenue Growth April 19th 2022

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Tractor Supply. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 11%. For context, the second largest shareholder holds about 9.8% of the shares outstanding, followed by an ownership of 4.4% by the third-largest shareholder.

A closer look at our ownership figures suggests that the top 25 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Tractor Supply

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 Tractor Supply Company. 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$129m 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

The general public, who are usually individual investors, hold a 14% stake in Tractor Supply. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Tractor Supply better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Tractor Supply you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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