Yahoo Finance Arista Networks, Inc. (NYSE:ANET) is favoured by institutional owners who hold 70% of the company
Key Insights
Significantly high institutional ownership implies Arista Networks' stock price is sensitive to their trading actions
A total of 11 investors have a majority stake in the company with 51% ownership
If you want to know who really controls Arista Networks, Inc. (NYSE:ANET), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 70% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.
In the chart below, we zoom in on the different ownership groups of Arista Networks.
Check out our latest analysis for Arista Networks
What Does The Institutional Ownership Tell Us About Arista Networks?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Arista Networks does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Arista Networks' earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Arista Networks. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Arista Networks' case, its Top Key Executive, Andreas Bechtolsheim, is the largest shareholder, holding 15% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 8.4% of common stock, and BlackRock, Inc. holds about 6.1% of the company stock. Furthermore, CEO Jayshree Ullal is the owner of 3.1% of the company's shares.
Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 11 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Arista Networks
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
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.
It seems insiders own a significant proportion of Arista Networks, Inc.. Insiders own US$17b worth of shares in the US$93b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public, who are usually individual investors, hold a 12% stake in Arista Networks. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Arista Networks is showing 1 warning sign in our investment analysis , you should know about...
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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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.
