The major shareholder groups of American Financial Group, Inc. (NYSE: AFG) hold power over the company. Insiders often own a large portion of younger, smaller companies, while large companies tend to have institutions as shareholders. Warren Buffett said he likes “a company that has an enduring competitive advantage and is run by capable, owner-focused people.” So it’s nice to see some inside ownership as it may suggest that the management is owner-focused.
American Financial Group is a pretty big company. It has a market cap of $ 10 billion. Typically, institutions would own a significant stake in a company of this size. A look at our data on owner groups (below) shows that institutions stand out in the share register. Let’s dive deeper into each type of owner to learn more about the American Financial Group.
Check out our latest analysis for the American Financial Group
What does institutional ownership tell us about the American Financial Group?
Many institutions measure their performance against an index that approximates the local market. As a result, they tend to pay more attention to companies that are in major indices.
As you can see, institutional investors have a fair stake in American Financial Group. This may suggest that the company has some credibility in the investment community. However, it is best to be careful not to rely on the supposed validation of institutional investors. Sometimes they get it wrong too. If several institutions own a share, there is always the risk that they are in a “crowd trade”. When such a trade goes wrong, multiple parties can compete to sell stocks quickly. This risk is higher in a company with no history of growth. You can see the American Financial Group’s historical earnings and earnings below, but keep in mind that there is always more to history.
Investors should note that institutions actually own more than half of the company, so together they can exert significant power. We find that hedge funds do not make a sensible investment in the American Financial Group. From our data we conclude that the largest shareholder is Carl Lindner (who also holds the title of co-chairman of the board) with 15% of the shares issued. It is usually considered a good sign when an insider owns a significant number of shares in the company, in which case we are happy to have a company insider play the role of a major stakeholder. The second and third largest shareholders now hold 9.0% and 7.8% of the outstanding shares, respectively. In addition, Stephen Lindner, CEO of the company, directly holds 6.4% of the total outstanding shares.
The story goes on
We have also observed that the top 7 shareholders make up more than half of the share register, with some smaller shareholders to balance the interests of the larger ones to some extent.
Studying institutional ownership is a great way to measure and filter the expected performance of a stock. The same can be achieved by examining the sentiments of the analysts. Quite a few analysts cover the stock so you can easily look at its forecasted growth.
American Financial Group insider owned
While the exact definition of an insider can be subjective, almost every board member considers an insider. Management ultimately replies to the board. However, it is not uncommon for managers to be board members, especially when they are founders or CEOs.
Most consider insider ownership to be a positive as it may indicate that the board is well aligned with other shareholders. However, sometimes too much power is concentrated within this group.
Our information suggests that insiders have a significant stake in American Financial Group, Inc. Insiders own $ 2.2 billion of shares in the company, valued at $ 10 billion. That is quite meaningful. It’s good to see these investments. You can check here to see if these Insiders have bought recently.
General public property
The public holds 11% of the shares in the American Financial Group. While this group may not be in charge, it can certainly have a real impact on how the company is run.
While it is worth considering a company’s different groups of owners, there are other factors that are even more important. For example, consider the ubiquitous specter of investment risk. We have identified 4 warning signs with and understanding American Financial Group (at least 1 potentially serious) should be part of your investment process.
Eventually the future is the most important. You can access it free Report on analyst forecast for the company.
Note: The numbers in this article are calculated using data for the past twelve months, which refers to the twelve month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the annual financial statements.
This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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