Institutional owners may take dramatic actions as Pinnacle Financial Partners, Inc.’s (NASDAQ:PNFP) recent 3.0% drop adds to one-year losses

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Key Insights

  • Given the large stake in the stock by institutions, Pinnacle Financial Partners’ stock price might be vulnerable to their trading decisions

  • A total of 15 investors have a majority stake in the company with 51% ownership

  • Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

To get a sense of who is truly in control of Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), 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 86% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, institutional investors endured the highest losses last week after market cap fell by US$168m. The recent loss, which adds to a one-year loss of 15% for stockholders, may not sit well with this group of investors. Institutions or “liquidity providers” control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. Hence, if weakness in Pinnacle Financial Partners’ share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

Let’s take a closer look to see what the different types of shareholders can tell us about Pinnacle Financial Partners.

See our latest analysis for Pinnacle Financial Partners

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What Does The Institutional Ownership Tell Us About Pinnacle Financial Partners?

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 Pinnacle Financial Partners. 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 Pinnacle Financial Partners’ historic earnings and revenue below, but keep in mind there’s always more to the story.

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earnings-and-revenue-growth

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 Pinnacle Financial Partners. The Vanguard Group, Inc. is currently the company’s largest shareholder with 9.3% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 9.0% of common stock, and T. Rowe Price Group, Inc. holds about 5.7% of the company stock.

A closer look at our ownership figures suggests that the top 15 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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 Pinnacle Financial Partners

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

We can report that insiders do own shares in Pinnacle Financial Partners, Inc.. The insiders have a meaningful stake worth US$115m. Most would see this as a real positive. If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 11% stake in Pinnacle Financial Partners. 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:

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. Be aware that Pinnacle Financial Partners is showing 1 warning sign in our investment analysis , you should know about…

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

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