Yahoo Finance Individual investors are Talen Energy Corporation's (NASDAQ:TLN) biggest owners and were rewarded after market cap rose by US$700m last week
Key Insights
The considerable ownership by individual investors in Talen Energy indicates that they collectively have a greater say in management and business strategy
43% of the business is held by the top 25 shareholders
Every investor in Talen Energy Corporation (NASDAQ:TLN) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 56% to be precise, is individual investors. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, individual investors collectively scored the highest last week as the company hit US$7.5b market cap following a 10% gain in the stock.
Let's delve deeper into each type of owner of Talen Energy, beginning with the chart below.
See our latest analysis for Talen Energy
What Does The Institutional Ownership Tell Us About Talen Energy?
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.
Talen Energy already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Talen Energy, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 28% of Talen Energy shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. Rubric Capital Management LP is currently the largest shareholder, with 19% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.4% and 3.8%, of the shares outstanding, respectively.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Talen Energy
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our data cannot confirm that board members are holding shares personally. It is unusual not to have at least some personal holdings by board members, so our data might be flawed. A good next step would be to check how much the CEO is paid.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 56% of Talen Energy shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Talen Energy better, we need to consider many other factors. Be aware that Talen Energy is showing 3 warning signs in our investment analysis , and 2 of those don't sit too well with us...
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
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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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
