Key Insights

• Significantly high institutional ownership implies W.W. Grainger's stock price is sensitive to their trading actions
• A total of 16 investors have a majority stake in the company with 50% ownership
• Insiders have sold recently

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Every investor in W.W. Grainger, Inc. (NYSE:GWW) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 74% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, institutional investors endured the highest losses last week after market cap fell by US$1.6b. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 6.4% for 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 downtrend continues, institutions may face pressures to sell W.W. Grainger, which might have negative implications on individual investors.

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

Check out our latest analysis for W.W. Grainger

What Does The Institutional Ownership Tell Us About W.W. Grainger?

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.

W.W. Grainger already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 W.W. Grainger's earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in W.W. Grainger. The Vanguard Group, Inc. is currently the company's largest shareholder with 11% of shares outstanding. With 8.3% and 7.9% of the shares outstanding respectively, BlackRock, Inc. and Susan Williams are the second and third largest shareholders. Susan Williams, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 16 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 W.W. Grainger

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

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in W.W. Grainger, Inc.. It is a very large company, and board members collectively own US$3.7b worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 17% ownership, the general public, mostly comprising of individual investors, have some degree of sway over W.W. Grainger. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that W.W. Grainger 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.

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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.