New Zealand markets closed
  • NZX 50

    11,434.82
    -83.50 (-0.72%)
     
  • NZD/USD

    0.5746
    -0.0099 (-1.70%)
     
  • NZD/EUR

    0.5922
    -0.0016 (-0.27%)
     
  • ALL ORDS

    6,788.70
    -132.70 (-1.92%)
     
  • ASX 200

    6,574.70
    -125.50 (-1.87%)
     
  • OIL

    79.43
    -4.06 (-4.86%)
     
  • GOLD

    1,651.70
    -29.40 (-1.75%)
     
  • NASDAQ

    11,311.24
    -190.40 (-1.66%)
     
  • FTSE

    7,018.60
    -140.92 (-1.97%)
     
  • Dow Jones

    29,590.41
    -486.27 (-1.62%)
     
  • DAX

    12,284.19
    -247.44 (-1.97%)
     
  • Hang Seng

    17,933.27
    -214.68 (-1.18%)
     
  • NIKKEI 225

    27,153.83
    -159.30 (-0.58%)
     
  • NZD/JPY

    82.3420
    -0.8330 (-1.00%)
     

Could The Avantor, Inc. (NYSE:AVTR) Ownership Structure Tell Us Something Useful?

·4-min read

The big shareholder groups in Avantor, Inc. (NYSE:AVTR) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Companies that have been privatized tend to have low insider ownership.

Avantor is a pretty big company. It has a market capitalization of US$20b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions are noticeable on the share registry. Let's delve deeper into each type of owner, to discover more about Avantor.

Check out our latest analysis for Avantor

ownership-breakdown
ownership-breakdown

What Does The Institutional Ownership Tell Us About Avantor?

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 Avantor. 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. 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 Avantor's historic earnings and revenue below, but keep in mind there's always more to the story.

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. Hedge funds don't have many shares in Avantor. T. Rowe Price Group, Inc. is currently the company's largest shareholder with 12% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.5% and 6.0%, of the shares outstanding, respectively.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 14 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Avantor

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that Avantor, Inc. insiders own under 1% of the company. 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$93m 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

The general public-- including retail investors -- own 15% stake in the company, and hence can't easily be ignored. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Avantor better, we need to consider many other factors. Be aware that Avantor is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...

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.

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