Heartland Financial USA, Inc.’s (NASDAQ:HTLF) recent 5.3% pullback adds to one-year year losses, institutional owners may take drastic measures

Key Insights

• Institutions’ substantial holdings in Heartland Financial USA implies that they have significant influence over the company’s share price
• A total of 12 investors have a majority stake in the company with 51% ownership
• Recent purchases by insiders

If you want to know who really controls Heartland Financial USA, Inc. (NASDAQ:HTLF), 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 70% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors endured the highest losses after the company’s share price fell by 5.3% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 40% for shareholders. Also referred to as “smart money”, institutions have a lot of sway over how a stock’s price moves. Hence, if weakness in Heartland Financial USA’s share price continues, institutional investors may feel compelled to sell the stock, which might not be ideal for individual investors.

Let’s take a closer look to see what the different types of shareholders can tell us about Heartland Financial USA.

See our latest analysis for Heartland Financial USA

What Does The Institutional Ownership Tell Us About Heartland Financial USA?

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.

Heartland Financial USA already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Heartland Financial USA, (below). Of course, keep in mind that there are other factors to consider, too.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don’t have a meaningful investment in Heartland Financial USA. BlackRock, Inc. is currently the company’s largest shareholder with 14% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 7.3% of common stock, and EARNEST Partners, LLC holds about 6.4% of the company stock.

Looking at the shareholder registry, we can see that 51% 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 Heartland Financial USA

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can report that insiders do own shares in Heartland Financial USA, Inc.. The insiders have a meaningful stake worth US$107m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 21% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Heartland Financial USA. 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:

It’s always worth thinking about the different groups who own shares in a company. But to understand Heartland Financial USA better, we need to consider many other factors. For example, we’ve discovered 2 warning signs for Heartland Financial USA (1 doesn’t sit too well with us!) that you should be aware of before investing here.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.