Is Nordstrom, Inc.'s (NYSE:JWN) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
January 16, 2022
NYSE:JWN
Source: Shutterstock

Every investor in Nordstrom, Inc. (NYSE:JWN) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Nordstrom has a market capitalization of US$3.5b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. Our analysis of the ownership of the company, below, shows that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Nordstrom.

View our latest analysis for Nordstrom

ownership-breakdown
NYSE:JWN Ownership Breakdown January 16th 2022

What Does The Institutional Ownership Tell Us About Nordstrom?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Nordstrom. 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 Nordstrom, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:JWN Earnings and Revenue Growth January 16th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Nordstrom is not owned by hedge funds. Bruce Nordstrom is currently the company's largest shareholder with 16% of shares outstanding. With 9.7% and 7.0% of the shares outstanding respectively, Anne E. Gittinger and FMR LLC are the second and third largest shareholders. Additionally, the company's CEO Erik Nordstrom directly holds 1.7% of the total shares outstanding.

On further inspection, we found that more than half the company's shares are owned by the top 7 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Nordstrom

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. 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.

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 a reasonable proportion of Nordstrom, Inc.. Insiders own US$1.1b worth of shares in the US$3.5b company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Nordstrom. 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 Nordstrom better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Nordstrom (including 1 which makes us a bit uncomfortable) .

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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