Institutions' substantial holdings in Automatic Data Processing implies that they have significant influence over the company's share price
A total of 25 investors have a majority stake in the company with 47% ownership
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
If you want to know who really controls Automatic Data Processing, Inc. (NASDAQ:ADP), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 81% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
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. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
Let's delve deeper into each type of owner of Automatic Data Processing, beginning with the chart below.
What Does The Institutional Ownership Tell Us About Automatic Data Processing?
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.
We can see that Automatic Data Processing does have institutional investors; and they hold a good portion of the company's stock. 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 Automatic Data Processing's historic earnings and revenue below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Automatic Data Processing. The Vanguard Group, Inc. is currently the company's largest shareholder with 9.8% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.3% of common stock, and State Street Global Advisors, Inc. holds about 4.4% of the company 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Automatic Data Processing
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 Automatic Data Processing, Inc.. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$137m 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-- including retail investors -- own 18% stake in the company, and hence can't easily be ignored. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important.
Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.
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.
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.
投資家は、機関投資家が実際に半数以上の企業を所有しているため、集合的に重要な影響力を持つ可能性があることに注意してください。ヘッジファンドがオートマチックデータプロセッシングに重要な投資をしていないことに注目してください。現在、The Vanguard Group、Inc.が発行済み株式の9.8%を保有しているため、同社が最大の株主です。BlackRock、Inc.は普通株式の8.3%を保有し、State Street Global Advisors、Inc.は同社の株式の約4.4%を保有しています。
最近のデータでは、内部関係者がAutomatic Data Processing、Inc.の株式の1%未満を所有していることがわかっています。これほど大規模な場合、内部関係者が株式の大部分を所有することは期待できません。彼らは合わせて1,370万米ドルの株式を所有しています。このような状況では、内部関係者が株式を買ったり売ったりしたかどうかを確認することがより興味深くなる場合があります。
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オーストラリアでは、moomooの投資商品及びサービスはMoomoo Securities Australia Limitedによって提供され、オーストラリア証券投資委員会(ASIC)の管理を受けております(AFSL No. 224663)。「金融サービスガイド」、「利用規約」、「プライバシーポリシー」などの詳細は、Moomoo Securities Australia Limitedのウェブサイトhttps://www.moomoo.com/auでご確認いただけます。