April 13, 2024
Mortgage

Institutional investors control 71% of Federal Agricultural Mortgage Corporation (NYSE:AGM) and were rewarded last week after stock increased 4.1%


Key Insights

  • Significantly high institutional ownership implies Federal Agricultural Mortgage’s stock price is sensitive to their trading actions
  • The top 15 shareholders own 50% of the company
  • Insiders have sold recently

A look at the shareholders of Federal Agricultural Mortgage Corporation (NYSE:AGM) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 71% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And as as result, institutional investors reaped the most rewards after the company’s stock price gained 4.1% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 70%.

Let’s take a closer look to see what the different types of shareholders can tell us about Federal Agricultural Mortgage.

See our latest analysis for Federal Agricultural Mortgage

NYSE:AGM Ownership Breakdown December 25th 2023

What Does The Institutional Ownership Tell Us About Federal Agricultural Mortgage?

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 Federal Agricultural Mortgage. 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 Federal Agricultural Mortgage’s historic earnings and revenue below, but keep in mind there’s always more to the story.

NYSE:AGM Earnings and Revenue Growth December 25th 2023

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 Federal Agricultural Mortgage. Our data shows that BlackRock, Inc. is the largest shareholder with 8.0% of shares outstanding. FMR LLC is the second largest shareholder owning 5.6% of common stock, and The Vanguard Group, Inc. holds about 5.3% of the company stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 15 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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 Federal Agricultural Mortgage

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 see that insiders own shares in Federal Agricultural Mortgage Corporation. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around US$28m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 23% stake in Federal Agricultural Mortgage. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 4.5%, of the shares on issue. It’s hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We’ve spotted 1 warning sign for Federal Agricultural Mortgage you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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 Federal Agricultural Mortgage 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.



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