Key Insights
With high institutional ownership, CVS Health’s stock price may be affected by the trading decisions of institutional investors.
The top 19 shareholders own 50% of the company.
Analyst forecasts and ownership data help give you a strong idea of the business’s prospects.
If you want to know who really controls CVS Health Corporation ( NYSE:CVS ), then you’ll have to look at the makeup of its share registry. The group with the largest ownership of the company’s shares (about 83% to be exact) are institutional investors, in other words, this group faces the greatest upside potential (or downside risk).
Because institutional investors have vast amounts of capital and liquidity, their investment decisions tend to have a significant impact, especially on retail investors, so having a large amount of institutional capital invested in a company is often seen as a desirable characteristic.
The chart below zooms in on the different ownership groups within CVS Health.
Check out our latest analysis for CVS Health
Ownership Breakdown
What does institutional ownership tell us about CVS Health?
Institutions typically compare their own performance against a benchmark when reporting to their own investors, so when a stock is included in a major index, they often increase their interest in that stock. You can expect most companies to have some institutional investors on the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in CVS Health. This could indicate that the company has a certain degree of credibility in the investment community. However, it’s best to be cautious about relying on the approval of institutional investors. Even they can be wrong sometimes. It’s not uncommon to see a big drop in share price when two large institutional investors try to sell a stock at the same time. It’s therefore worth looking at the past earnings trajectory of CVS Health (below). Of course, keep in mind that there are other factors to consider, too.
Revenue and Revenue Growth
Since institutional investors own more than half the shares outstanding, the board will likely need to take their preferences into consideration. Hedge funds don’t have many shares in CVS Health. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc., holding 9.2% of shares outstanding. Meanwhile, the second and third largest shareholders hold 8.9% and 6.9%, of the shares outstanding respectively.
A closer look at the ownership figures shows that the top 19 shareholders hold a combined ownership of 50% with no single shareholder holding a majority.
The story continues
Researching institutional ownership is a good way to predict and sift through a stock’s expected performance. The same can be achieved by studying analyst sentiment. There are a sizable number of analysts covering the stock, so it could be useful to find out their aggregate view on the future.
Insider Ownership of CVS Health
The definition of a company insider can be subjective and varies by jurisdiction. Our data reflects individual insiders, and includes, at a minimum, directors. Management are ultimately accountable to the board of directors. However, it is not uncommon for management to also be members of the executive board, particularly if they are founders or CEOs.
Insider ownership can be a positive if it signals management 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, which can be a negative in some circumstances.
The most recent data shows that insiders own less than 1% of CVS Health Corporation shares. As it is a large company, we expect insider ownership is low. However, it is worth noting that insiders own US$108m worth of shares. It is good to see that directors own shares, but it might be worth checking if insiders have been buying shares.
General public property
The general public (including retail investors) own 17% of the company’s shares and cannot be easily ignored. While this size of ownership may not be enough to tilt policy decisions in their favor, they can still collectively influence corporate policy.
Next steps:
It can be very interesting to look at who exactly owns a company, but to gain real insight, you need to consider other information as well, for example, we’ve identified 1 warning sign for CVS Health you should be aware of.
If you’re like me, you might want to think about whether the company is likely to grow or shrink, and luckily you can check this free report showing analyst forecasts for the company in the future.
Note: The figures in this article are calculated using data from the last 12 months, which refers to the 12-month period ending on the last day of the month in which the financial statements are dated, which may not match the figures in the annual report.
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This article by Simply Wall St is of general nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell a stock, and does not take into account your objectives or financial situation. We aim to provide long-term analysis driven by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned herein.
