Key Insights

• Given the large stake in the stock by institutions, Prosperity Bancshares' stock price might be vulnerable to their trading decisions

• A total of 12 investors have a majority stake in the company with 51% ownership

• Insiders have been selling lately

Every investor in Prosperity Bancshares, Inc. (NYSE:PB) should be aware of the most powerful shareholder groups.  The group holding the most number of shares in the company, around 81% to be precise, is institutions.  Put another way, the group faces the maximum upside potential (or downside risk).

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors.  As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.  

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

NYSE:PB Ownership Breakdown June 4th 2024

What Does The Institutional Ownership Tell Us About Prosperity Bancshares?

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.

Prosperity Bancshares already has institutions on the share registry. Indeed, they own a respectable stake in the company.  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 Prosperity Bancshares, (below). Of course, keep in mind that there are other factors to consider, too.

NYSE:PB Earnings and Revenue Growth June 4th 2024

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences.    We note that hedge funds don't have a meaningful investment in Prosperity Bancshares.      Our data shows that The Vanguard Group, Inc. is the largest shareholder with 10% of shares outstanding.       BlackRock, Inc. is the second largest shareholder owning 8.8% of common stock, and Victory Capital Management Inc. holds about 6.4% of the company stock.      Furthermore, CEO David Zalman is the owner of 0.9% of the company's shares.  

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.  

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

Insider Ownership Of Prosperity Bancshares

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

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.

We can report that insiders do own shares in Prosperity Bancshares, Inc..   The insiders have a meaningful stake worth US$248m. Most would see this as a real positive.  If you would like to explore the question of insider alignment, you can  click here to see if insiders have been buying or selling.  

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Prosperity Bancshares.   While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.    Take risks for example - Prosperity Bancshares has   1 warning sign  we think you should be aware of.  

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.