Institutional owners may take dramatic actions as C3.ai, Inc.'s (NYSE:AI) recent 4.1% drop adds to one-year losses

Key Insights

• Given the large stake in the stock by institutions, C3.ai's stock price might be vulnerable to their trading decisions
• A total of 25 investors have a majority stake in the company with 47% ownership
• Insiders own 12% of C3.ai

To get a sense of who is truly in control of C3.ai, Inc. (NYSE:AI), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 44% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors endured the highest losses after the company's share price fell by 4.1% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 9.1% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell C3.ai, which might have negative implications on individual investors.

In the chart below, we zoom in on the different ownership groups of C3.ai.

Check out our latest analysis for C3.ai

What Does The Institutional Ownership Tell Us About C3.ai?

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.

C3.ai already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 C3.ai's earnings history below. Of course, the future is what really matters.

C3.ai is not owned by hedge funds. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 9.8%. For context, the second largest shareholder holds about 8.5% of the shares outstanding, followed by an ownership of 5.9% by the third-largest shareholder. Thomas Siebel, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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 C3.ai

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of C3.ai, Inc.. It is very interesting to see that insiders have a meaningful US$398m stake in this US$3.5b business. 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

With a 43% ownership, the general public, mostly comprising of individual investors, have some degree of sway over C3.ai. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for C3.ai that you should be aware of before investing here.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.