key insights
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Significantly high institutional ownership means Telephone and Data Systems stock price is sensitive to trading activity
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A total of 11 investors hold a majority stake in the company, with 50% ownership.
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Analyst forecasts and ownership data help give you a strong idea about business prospects
Every investor in Telephone and Data Systems, Inc. (NYSE:TDS) should be aware of the most powerful shareholder groups. We can see that institutional investors have a majority ownership in the company, with an ownership of 80%. In other words, the group faces the greatest upside potential (or downside risk).
Given the vast amounts of capital and research power at their disposal, institutional ownership tends to be particularly heavy for retail investors. Therefore, a significant portion of institutional funds invested in a company is usually a huge vote of confidence in the company's future.
The chart below zooms in on the different ownership groups for telephone and data systems.
See the latest analysis for Phone and Data Systems.
What does institutional ownership tell us about phone and data systems?
Many institutions measure performance based on indicators that approximate local markets. So they usually pay more attention to companies that are included in major indices.
We can see that Telephone and Data Systems does have institutional investors. And they own a significant portion of the company's stock. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. If such a trade goes wrong, multiple parties may compete to sell stock quickly. This risk is higher for companies without a history of growth. You can see Telephone and Data Systems' historic earnings and revenue below, but keep in mind there's always more to the story.
Institutional investors own over 50% of a company, so when they come together they can strongly influence board decisions. Telephone and Data Systems is not owned by hedge funds. BlackRock, Inc. is currently his largest shareholder with 16% of the outstanding shares. For context, the second largest shareholder holds about 11% of the shares outstanding, followed by an ownership of 4.2% by the third largest shareholder. Furthermore, the company's CEO Leroy Carlson directly holds 2.9% of the total outstanding shares.
Upon further investigation, we found that the top 11 companies collectively own 50% of the company, suggesting that no single shareholder has significant control over the company.
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 plenty of analysts covering the stock, so it might be worth seeing what they are predicting.
Insider ownership of telephone and data systems
The precise definition of an insider can be subjective, but almost everyone considers board members to be insiders. The answers of company management to the board of directors and the latter must represent the interests of shareholders. In particular, top-level managers may serve on the board themselves.
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.
We can report that insiders own shares in Telephone and Data Systems, Inc. Insiders say he holds significant shares worth US$133m. Most people would consider this a very positive thing. If you want to know more about insider alignment issues, click here to see if insiders have been buying or selling.
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.
Next steps:
It's always worth thinking about the different groups who own shares in a company. But to better understand your phone and data system, you need to consider many other factors. For example, we discovered that 2 Warning Signs for Phone and Data Systems What you need to know before investing here.
If you want to know what analysts are predicting in terms of future growth, don't miss this free Report on analyst forecasts.
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 using only unbiased methodologies, based on historical data and analyst forecasts, 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.