Steel

With 82% institutional ownership, Reliance Steel & Aluminum Co. (NYSE:RS) is a favorite amongst the big guns

Key Insights

  • Given the large stake in the stock by institutions, Reliance Steel & Aluminum’s stock price might be vulnerable to their trading decisions
  • 51% of the business is held by the top 16 shareholders
  • Recent sales by insiders

A look at the shareholders of Reliance Steel & Aluminum Co. (NYSE:RS) can tell us which group is most powerful. We can see that institutions own the lion’s share in the company with 82% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let’s take a closer look to see what the different types of shareholders can tell us about Reliance Steel & Aluminum.

Check out our latest analysis for Reliance Steel & Aluminum

NYSE:RS Ownership Breakdown January 3rd 2024

What Does The Institutional Ownership Tell Us About Reliance Steel & Aluminum?

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 Reliance Steel & Aluminum. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Reliance Steel & Aluminum’s historic earnings and revenue below, but keep in mind there’s always more to the story.

NYSE:RS Earnings and Revenue Growth January 3rd 2024

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don’t have many shares in Reliance Steel & Aluminum. Our data shows that The Vanguard Group, Inc. is the largest shareholder with 12% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 4.5% by the third-largest shareholder.

After doing some more digging, we found that the top 16 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Reliance Steel & Aluminum

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.

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.

Our data suggests that insiders own under 1% of Reliance Steel & Aluminum Co. in their own names. As it is a large company, we’d only expect insiders to own a small percentage of it. But it’s worth noting that they own US$104m worth of shares. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Reliance Steel & Aluminum. 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. Case in point: We’ve spotted 2 warning signs for Reliance Steel & Aluminum you should be aware of, and 1 of them 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.

Valuation is complex, but we’re helping make it simple.

Find out whether Reliance Steel & Aluminum is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.


Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button