Institutional investors are Western Digital Corporation's (NASDAQ:WDC) biggest bettors and were rewarded after last week's US$1.2b market cap gain

editorial-team@simplywallst.com (Simply Wall St)

December 14, 2023 4 min read

Key Insights

Given the large stake in the stock by institutions, Western Digital's stock price might be vulnerable to their trading decisions
A total of 12 investors have a majority stake in the company with 50% ownership
Insiders have sold recently

If you want to know who really controls Western Digital Corporation (NASDAQ:WDC), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 87% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And as as result, institutional investors reaped the most rewards after the company's stock price gained 7.7% last week. The gains from last week would have further boosted the one-year return to shareholders which currently stand at 41%.

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

Check out our latest analysis for Western Digital

ownership-breakdown — NasdaqGS:WDC Ownership Breakdown December 14th 2023

What Does The Institutional Ownership Tell Us About Western Digital?

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.

As you can see, institutional investors have a fair amount of stake in Western Digital. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Western Digital's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — NasdaqGS:WDC Earnings and Revenue Growth December 14th 2023

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 Western Digital. The Vanguard Group, Inc. is currently the company's largest shareholder with 12% of shares outstanding. The second and third largest shareholders are T. Rowe Price Group, Inc. and BlackRock, Inc., with an equal amount of shares to their name at 8.1%.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Western Digital

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own less than 1% of Western Digital Corporation. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own US$66m worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Western Digital (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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