Key findings

• The significant institutional holdings in Charles Schwab imply that they have significant influence on the company’s share price.

• The 18 largest shareholders own 50% of the company

• Recent purchases by insiders

If you want to know who really controls the Charles Schwab Corporation (NYSE:SCHW), you need to look at the makeup of its share registry. The group that owns the most shares in the company, around 71%, are institutions. That means this group benefits the most when the stock rises (or loses the most when there is a downturn).

Since institutional owners have a huge pool of resources and liquidity, their investment decisions tend to carry a lot of weight, especially with individual investors. Therefore, a good chunk of institutional money invested in the company is usually a great vote of confidence in its future.

Let’s take a closer look at what the different shareholder types can tell us about Charles Schwab.

Check out our latest analysis on Charles Schwab

What does institutional ownership tell us about Charles Schwab?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on their registry, especially if they’re growing.

As you can see, institutional investors own a sizable portion of Charles Schwab. This suggests some credibility among professional investors. But we can’t rely on this fact alone, as institutions sometimes make bad investments, just like everyone else does. When multiple institutions own a stock, there’s always the risk that they’re involved in a “crowd trade.” If such a trade goes wrong, multiple parties may be competing to sell the shares quickly. This risk is higher with a company without a history of growth. You can see Charles Schwab’s historical earnings and revenue below, but keep in mind there’s always more to the story.

Since institutional investors own more than half of the outstanding shares, the board will likely need to pay attention to their preferences. Hedge funds don’t own a lot of Charles Schwab stock. Our data shows that Toronto-Dominion Bank is the largest shareholder, with 10% of outstanding shares. In comparison, the second and third largest shareholders hold about 6.7% and 5.5% of the shares, respectively.

A closer look at our ownership figures suggests that the top 18 shareholders together own 50%, meaning no single shareholder has a majority.

The story continues

While studying institutional ownership of a company can enrich your research, it is also a good practice to research analyst recommendations to get a deeper understanding of a stock’s expected performance. Quite a few analysts cover the stock, so you can examine the forecast growth quite easily.

Insider ownership of Charles Schwab

The definition of corporate insiders can be subjective and varies by jurisdiction. Our data reflects individual insiders and captures at least board members. Management is ultimately accountable to the board. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

I think insider ownership is generally a good thing. However, in some cases it makes it harder for other shareholders to hold the board accountable for decisions.

Our latest data shows that insiders own some shares of Charles Schwab Corporation. The insiders own a significant stake worth $1.6 billion. Sometimes we are interested in whether they have been buying or selling.

Public property

The general public, usually retail investors, owns 13% of Charles Schwab. While this group does not necessarily call the shots, it can certainly have a real influence on how the company is run.

Private company ownership

According to our data, private companies own 4.3% of a company’s shares. This fact alone is difficult to draw conclusions from, so it’s worth investigating who owns these private companies. Sometimes insiders or other related parties have an interest in a public company’s shares through a separate private company.

Ownership of public companies

It appears to us that publicly traded companies own 10% of Charles Schwab. This could be a strategic interest and the two companies may have related business interests. It could be that they have split. This holding is probably worth investigating further.

Next Steps:

I find it very interesting to investigate who exactly owns a company, but to gain real insights we need to consider other information as well.

Many find it useful to take a detailed look at a company’s past performance. You can access these detailed graphics of previous earnings, sales and cash flows.

But ultimately It is the futurenot the past, will determine how well the owners of this company will perform, so we think it wise to take a look at this free report showing whether analysts are predicting a better future.

NB: The figures in this article are calculated using the last twelve months’ data, which 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 figures in the annual report.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.