Yahoo Finance Institutional investors are Advanced Micro Devices, Inc.'s (NASDAQ:AMD) biggest bettors and were rewarded after last week's US$32b market cap gain
Key Insights
Given the large stake in the stock by institutions, Advanced Micro Devices' stock price might be vulnerable to their trading decisions
The top 25 shareholders own 44% of the company
Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
Every investor in Advanced Micro Devices, Inc. (NASDAQ:AMD) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 70% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
And as as result, institutional investors reaped the most rewards after the company's stock price gained 12% last week. The one-year return on investment is currently 61% and last week's gain would have been more than welcomed.
Let's take a closer look to see what the different types of shareholders can tell us about Advanced Micro Devices.
See our latest analysis for Advanced Micro Devices
What Does The Institutional Ownership Tell Us About Advanced Micro Devices?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in Advanced Micro Devices. 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Advanced Micro Devices' historic earnings and revenue below, but keep in mind there's always more to the story.
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 Advanced Micro Devices. The Vanguard Group, Inc. is currently the company's largest shareholder with 9.0% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 7.7% of common stock, and State Street Global Advisors, Inc. holds about 4.2% of the company stock.
On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.
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 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 Advanced Micro Devices
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.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our data suggests that insiders own under 1% of Advanced Micro Devices, Inc. in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$1.5b of stock. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.
General Public Ownership
With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Advanced Micro Devices. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Next Steps:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
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
