Key Insights
- Significantly high institutional ownership implies Franklin Resources' stock price is sensitive to their trading actions
- 50% of the business is held by the top 4 shareholders
- Insiders own 40% of Franklin Resources
If you want to know who really controls Franklin Resources, Inc. (NYSE:BEN), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 48% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$13b last week after a 8.6% drop in the share price. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 6.3% might not go down well especially with this category of shareholders. 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. As a result, if the decline continues, institutional investors may be pressured to sell Franklin Resources which might hurt individual investors.
In the chart below, we zoom in on the different ownership groups of Franklin Resources.
What Does The Institutional Ownership Tell Us About Franklin Resources?
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.
We can see that Franklin Resources does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Franklin Resources, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don't have many shares in Franklin Resources. From our data, we infer that the largest shareholder is Rupert Johnson (who also holds the title of Senior Key Executive) with 20% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Charles Johnson is the second largest shareholder owning 19% of common stock, and The Vanguard Group, Inc. holds about 6.1% of the company stock. Furthermore, CEO Jennifer Johnson is the owner of 1.0% of the company's shares.
To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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 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 Franklin Resources
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 most recent data indicates that insiders own a reasonable proportion of Franklin Resources, Inc.. Insiders own US$5.3b worth of shares in the US$13b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Franklin Resources. 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 Franklin Resources better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Franklin Resources .
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.
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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.