Key Insights

• Given the large stake in the stock by institutions, Evonik Industries' stock price might be vulnerable to their trading decisions

• The top 2 shareholders own 52% of the company

• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Evonik Industries AG (ETR:EVK) can tell us which group is most powerful. The group holding the most number of shares in the company, around 70% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's take a closer look to see what the different types of shareholders can tell us about Evonik Industries.

Check out our latest analysis for Evonik Industries

What Does The Institutional Ownership Tell Us About Evonik Industries?

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.

Evonik Industries 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Evonik Industries' historic earnings and revenue below, but keep in mind there's always more to the story.

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 Evonik Industries. RAG Foundation, Endowment Arm is currently the company's largest shareholder with 47% of shares outstanding. With 5.2% and 4.2% of the shares outstanding respectively, Mondrian Investment Partners Limited and BlackRock, Inc. are the second and third largest shareholders.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.