Thu. Oct 5th, 2023
    Understanding Institutional Ownership: Insights into Valero Energy Corporation

    Institutions’ substantial holdings in Valero Energy imply that they have significant influence over the company’s share price. Analyzing the shareholders of Valero Energy Corporation (NYSE:VLO) can provide valuable insights into the ownership landscape and the groups that wield the most power.

    According to recent data, institutions own a significant 80% of Valero Energy’s shares, making them the most powerful group in terms of ownership. Institutional investors are known to have a substantial pool of resources and liquidity, which gives their investment decisions a great deal of weight. Therefore, when institutions invest a sizable amount in a company, it is generally seen as a positive attribute.

    Taking a closer look at the types of shareholders in Valero Energy, it is evident that institutional investors hold a fair amount of stake in the company. This suggests that analysts working for these institutions have analyzed the stock and found it favorable. However, it is important to note that a crowded trade, where multiple institutions own a stock, carries a higher risk, particularly for companies without a history of growth.

    Among the institutional investors in Valero Energy, The Vanguard Group, Inc. holds the majority stake with 9.7% of shares, followed by BlackRock, Inc. and State Street Global Advisors, Inc. as the second and third largest shareholders, with 8.3% and 6.9% ownership, respectively. Interestingly, the top 25 shareholders collectively own 50% of the company, indicating that no single shareholder has a majority interest in the ownership.

    Researching institutional ownership is crucial for assessing a stock’s performance. Analyst sentiments also play a significant role in evaluating a company’s growth potential. With several analysts covering Valero Energy, it is relatively easy to delve into forecasted growth.

    When it comes to insider ownership, Valero Energy has a relatively low figure, with insiders owning less than 1% of the company’s shares. Nonetheless, board members collectively hold shares worth US$242 million, suggesting their vested interest in the company.

    The general public, comprising individual investors, holds a 20% stake in Valero Energy. Although they do not have the power to call the shots, their influence on the company’s operations cannot be overlooked.

    While understanding the different groups that own a company is important, it is equally crucial to consider other factors that impact investment risk. Assessing warning signs and analyst forecasts should be part of the investment process to make informed decisions.

    Source: Simply Wall St