Yahoo Finance Marathon Petroleum Corporation's (NYSE:MPC) high institutional ownership speaks for itself as stock continues to impress, up 7.2% over last week
Key Insights
Institutions' substantial holdings in Marathon Petroleum implies that they have significant influence over the company's share price
50% of the business is held by the top 25 shareholders
To get a sense of who is truly in control of Marathon Petroleum Corporation (NYSE:MPC), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 78% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And last week, institutional investors ended up benefitting the most after the company hit US$79b in market cap. The one-year return on investment is currently 71% and last week's gain would have been more than welcomed.
In the chart below, we zoom in on the different ownership groups of Marathon Petroleum.
View our latest analysis for Marathon Petroleum
What Does The Institutional Ownership Tell Us About Marathon Petroleum?
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 the register, especially if they are growing.
As you can see, institutional investors have a fair amount of stake in Marathon Petroleum. 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 Marathon Petroleum, (below). Of course, keep in mind that there are other factors to consider, too.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Marathon Petroleum. The Vanguard Group, Inc. is currently the company's largest shareholder with 9.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.6% and 7.0%, of the shares outstanding, respectively.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Marathon Petroleum
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 Marathon Petroleum Corporation in their own names. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own US$139m worth of shares (at current prices). In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.
General Public Ownership
With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Marathon Petroleum. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Marathon Petroleum better, we need to consider many other factors. For instance, we've identified 3 warning signs for Marathon Petroleum (1 makes us a bit uncomfortable) that you should be aware of.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
