Canada markets open in 2 hours 48 minutes
  • S&P/TSX

    20,220.49
    -163.28 (-0.80%)
     
  • S&P 500

    3,963.94
    -62.18 (-1.54%)
     
  • DOW

    33,849.46
    -497.57 (-1.45%)
     
  • CAD/USD

    0.7439
    +0.0026 (+0.35%)
     
  • CRUDE OIL

    79.38
    +2.14 (+2.77%)
     
  • BTC-CAD

    22,197.43
    +289.03 (+1.32%)
     
  • CMC Crypto 200

    390.39
    +10.10 (+2.66%)
     
  • GOLD FUTURES

    1,768.60
    +13.30 (+0.76%)
     
  • RUSSELL 2000

    1,830.96
    -38.23 (-2.05%)
     
  • 10-Yr Bond

    3.7030
    0.0000 (0.00%)
     
  • NASDAQ futures

    11,672.00
    +55.75 (+0.48%)
     
  • VOLATILITY

    22.23
    +1.73 (+8.44%)
     
  • FTSE

    7,524.05
    +50.03 (+0.67%)
     
  • NIKKEI 225

    28,027.84
    -134.99 (-0.48%)
     
  • CAD/EUR

    0.7166
    +0.0003 (+0.04%)
     

With 82% ownership of the shares, RLI Corp. (NYSE:RLI) is heavily dominated by institutional owners

Every investor in RLI Corp. (NYSE:RLI) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 82% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute.

In the chart below, we zoom in on the different ownership groups of RLI.

View our latest analysis for RLI

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About RLI?

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 RLI does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 RLI, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
earnings-and-revenue-growth

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 RLI. Looking at our data, we can see that the largest shareholder is State Street Global Advisors, Inc. with 10% of shares outstanding. With 10% and 10% of the shares outstanding respectively, BlackRock, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

We also observed that the top 9 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of RLI

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership 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 in some circumstances.

We can see that insiders own shares in RLI Corp.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$191m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in RLI. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - RLI has 2 warning signs we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here