With 73% ownership in Microsoft Corporation (NASDAQ:MSFT), institutional investors have a lot riding on the business (2024)

Key Insights

• Given the large stake in the stock by institutions, Microsoft's stock price might be vulnerable to their trading decisions

• A total of 25 investors have a majority stake in the company with 44% ownership

• Recent sales by insiders

A look at the shareholders of Microsoft Corporation (NASDAQ:MSFT) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 73% 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$3.1t in market cap. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 58%.

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

See our latest analysis for Microsoft

What Does The Institutional Ownership Tell Us About Microsoft?

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.

As you can see, institutional investors have a fair amount of stake in Microsoft. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Microsoft's earnings history below. Of course, the future is what really matters.

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 Microsoft. The company's largest shareholder is The Vanguard Group, Inc., with ownership of 8.9%. BlackRock, Inc. is the second largest shareholder owning 7.3% of common stock, and State Street Global Advisors, Inc. holds about 4.0% of the company stock.

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 it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Microsoft

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 circ*mstances.

Our most recent data indicates that insiders own less than 1% of Microsoft Corporation. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own US$1.1b 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

The general public, who are usually individual investors, hold a 27% stake in Microsoft. 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. Take risks for example - Microsoft has 1 warning sign we think 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.