Institutional investors have a lot riding on McGrath RentCorp (NASDAQ:MGRC) with 86% ownership

McGrath RentCorp +0.48%

McGrath RentCorp

MGRC

110.76

+0.48%

Key Insights

  • Significantly high institutional ownership implies McGrath RentCorp's stock price is sensitive to their trading actions
  • The top 9 shareholders own 51% of the company
  • Insiders have sold recently

Every investor in McGrath RentCorp (NASDAQ:MGRC) should be aware of the most powerful shareholder groups. With 86% stake, institutions possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Last week’s 8.9% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. One-year return to shareholders is currently 31% and last week’s gain was the icing on the cake.

Let's delve deeper into each type of owner of McGrath RentCorp, beginning with the chart below.

View our latest analysis for McGrath RentCorp

ownership-breakdown
NasdaqGS:MGRC Ownership Breakdown January 30th 2024

What Does The Institutional Ownership Tell Us About McGrath RentCorp?

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.

McGrath RentCorp already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 McGrath RentCorp's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:MGRC Earnings and Revenue Growth January 30th 2024

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 McGrath RentCorp. The Vanguard Group, Inc. is currently the largest shareholder, with 11% of shares outstanding. BlackRock, Inc. is the second largest shareholder owning 8.7% of common stock, and Franklin Resources, Inc. holds about 8.4% of the company stock.

We did some more digging and found that 9 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of McGrath RentCorp

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of McGrath RentCorp in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$16m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand McGrath RentCorp better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with McGrath RentCorp .

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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