Stock Analysis

Institutional owners may take dramatic actions as Advanced Micro Devices, Inc.'s (NASDAQ:AMD) recent 11% drop adds to one-year losses

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NasdaqGS:AMD
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A look at the shareholders of Advanced Micro Devices, Inc. (NASDAQ:AMD) can tell us which group is most powerful. With 67% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$108b last week after a 11% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 34% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the downtrend continues, institutions may face pressures to sell Advanced Micro Devices, which might have negative implications on individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Advanced Micro Devices.

If you're not interested in researching AMD's ownership structure, we have a free list of interesting investing ideas to potentially inspire your next investment!

ownership-breakdown
NasdaqGS:AMD Ownership Breakdown September 28th 2022

What Does The Institutional Ownership Tell Us About Advanced Micro Devices?

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 Advanced Micro Devices. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Advanced Micro Devices' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:AMD Earnings and Revenue Growth September 28th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Advanced Micro Devices. The Vanguard Group, Inc. is currently the largest shareholder, with 8.3% of shares outstanding. In comparison, the second and third largest shareholders hold about 7.2% and 4.0% of the stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 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 Advanced Micro Devices

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 most recent data indicates that insiders own less than 1% of Advanced Micro Devices, Inc.. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$554m 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 33% stake in Advanced Micro Devices. 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 Advanced Micro Devices better, we need to consider many other factors. For example, we've discovered 3 warning signs for Advanced Micro Devices 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.

Valuation is complex, but we're helping make it simple.

Find out whether Advanced Micro Devices is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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About NasdaqGS:AMD

Advanced Micro Devices

Advanced Micro Devices, Inc. operates as a semiconductor company worldwide.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth5
Past Performance2
Financial Health6
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Flawless balance sheet with high growth potential.