Could the ownership structure of the Erie Indemnity Company (NASDAQ:ERIE) tell us anything useful?

0

Every investor in Erie Indemnity Company (NASDAQ:ERIE) should be aware of the most powerful shareholder groups. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

Erie Indemnity is a pretty big company. It has a market capitalization of US$8.0 billion. Normally, institutions own a significant share of a business of this size. Our analysis of societal ownership below shows that institutions own shares in society. We can zoom in on the different ownership groups, to learn more about Erie Indemnity.

See our latest analysis for Erie Indemnity

NasdaqGS: ERIE Ownership Breakdown January 28, 2022

What does institutional ownership tell us about Erie Indemnity?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

As you can see, institutional investors hold a sizable share of Erie Indemnity. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. So it’s worth checking out Erie Indemnity’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS: ERIE Earnings and Revenue Growth January 28, 2022

Erie Indemnity is not owned by hedge funds. Thomas Hagen is currently the largest shareholder, with 33% of the outstanding shares. In comparison, the second and third shareholders hold around 11% and 9.4% of the shares.

A more detailed study of the shareholder register showed us that 3 of the main shareholders hold a considerable stake in the company, via their 53% stake.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There is a little analyst coverage of the stock, but not much. So there is room for him to gain coverage.

Insider Ownership of Erie Indemnity

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Our most recent data indicates that insiders own a reasonable proportion of Erie Indemnity Company. It has a market capitalization of just $8.0 billion and insiders hold $3.7 billion worth of shares in their own name. It is quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if these insiders have been buying or selling.

General public property

The general public, who are typically individual investors, hold a 17% stake in Erie Indemnity. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Private Company Ownership

It appears that private companies own 12% of the shares of Erie Indemnity. Private companies can be related parties. Sometimes insiders have an interest in a public company through a stake in a private company, rather than in their own capacity as individuals. Although it is difficult to draw general conclusions, it should be noted that this is an area for further research.

Next steps:

I find it very interesting to see who exactly owns a company. But to really get insight, we also need to consider other information. To this end, you should be aware of the 1 warning sign we spotted with Erie Indemnity.

If you prefer to find out what analysts are predicting in terms of future growth, don’t miss this free analyst forecast report.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Share.

About Author

Comments are closed.