Given the large stake in the stock by financial institutions, American Financial Group's stock price may be sensitive to trading decisions by financial institutions.
A total of 7 investors hold a majority stake in the company, holding 53% of the ownership.
Insiders are selling lately
A look at American Financial Group, Inc. (NYSE:AFG)'s shareholders can tell us which group is the most powerful. And the groups that hold the biggest piece of the pie are institutions with 65% ownership. That is, if the stock price rises, the group will gain the most (or if the stock price falls, it will suffer the maximum loss).
Because institutional investors have vast resources and liquidity, their investment decisions tend to have significant influence, especially for individual investors. Therefore, having significant institutional investors invested in a company is often considered a desirable characteristic.
The chart below zooms in on the different ownership groups for American Financial Group.
Check out our latest analysis for American Financial Group.
What does institutional ownership tell us about American Financial Group?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they usually consider buying larger companies that are included in the relevant benchmark index.
American Financial Group already has a stock registry. In fact, they own a significant stake in the company. This implies the analysts working for these institutions have considered the stock and they like it. But just like anyone else, they can 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 American Financial Group, (below). Of course, keep in mind that there are other factors to consider as well.
Investors should note that institutional investors actually own more than half the company, so they can collectively wield significant power. Note that hedge funds don't have a meaningful investment in American Financial Group. Based on our data, we estimate that the largest shareholder is Karl Lindner (who also holds the title of Co-CEO), with an ownership of 14% of the shares outstanding. It's usually considered a good sign when insiders own a significant number of shares in a company, but in this case we see company insiders playing the role of key stakeholders. It's a pleasure. Holding 9.9% and 9.6% of the outstanding shares, The Vanguard Group, Inc. and BlackRock, Inc. are the second and third largest shareholders, respectively. Furthermore, the company's CEO Stephen Lindner directly holds 5.7% of the total outstanding shares.
After digging deeper, we found that more than half of the company's shares are owned by the top 7 shareholders. This suggests that the interests of large shareholders are balanced to some extent by small shareholders.
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 quite a few analysts covering this stock, so it might be useful to know their aggregate forecast for the future.
American Financial Group Insider Ownership
The definition of an insider may vary slightly from country to country, but members of the board of directors are always considered. Management ultimately answers to the board. However, it is not uncommon for managers to be members of the board of directors. Especially if the manager is the founder or CEO.
Insider ownership is positive when it signals leaders are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative depending on the situation.
It appears that insiders own a significant portion of American Financial Group. The company has a market capitalization of just $10b, but insiders have $2.3b worth of shares in their names. That's very important. Most people would be happy to see the board investing alongside them. You may want to access this free chart of recent insider transactions.
Open to the public
The general public, including retail investors, owns 12% of the company, so they can't be easily ignored. Although this size of ownership is significant, it may not be enough to change company policy if the decision is not aligned with other large shareholders.
I think it would be very interesting to find out who owns the company. But to really gain insight, you need to consider other information as well. For example, we identified 1 warning sign for American Financial Group What you need to know.
If you're like me, you might want to consider whether this company will grow or shrink. Luckily you can check this free report showing analyst forecasts for its future.
Note: The numbers in this article are calculated using data from the previous 12 months and refer to the 12-month period ending on the last day of the month in which the financial statements are dated. This may not match the 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 using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.