What does the ownership structure of 3M (NYSE: MMM) look like?

If you want to know who actually controls 3M Company (NYSE:MMM), then you’ll need to look at the composition of its share register. Insiders often own a large portion of younger, smaller companies, while larger companies tend to have institutions as shareholders. Companies that were previously publicly owned tend to have less insider ownership.

3M has a market cap of US$85 billion, so it’s too big to fly under the radar. We expect institutions and retail investors to own part of the business. Our analysis of company ownership, below, shows that institutional investors have bought the company. We can zoom in on the different ownership groups, to learn more about 3M.

NYSE: MMM Ownership Breakdown August 11, 2022

What does institutional ownership tell us about 3M?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it is included in a major index. We would expect most companies to have some institutions listed, especially if they are growing.

We can see that 3M has institutional investors; and they own a good part of the shares of the company. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see 3M’s historic earnings and revenue below, but keep in mind there’s always more to tell.

earnings-and-revenue-growth
NYSE: MMM Earnings and Revenue Growth August 11, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. 3M is not a hedge fund company. Looking at our data, we can see that the largest shareholder is The Vanguard Group, Inc. with 8.3% of shares outstanding. BlackRock, Inc. is the second-largest shareholder with 7.5% of common stock and State Street Global Advisors, Inc. owns approximately 5.7% of the company’s stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company’s shares, which means that the company’s shares are widely distributed and there is no dominant shareholder.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

3M Insider Ownership

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

I generally consider insider ownership to be a good thing. However, there are times when it is more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that 3M company insiders own less than 1% of the company. It’s a very big company, so it would be surprising to see insiders owning much of the company. Although their stake is less than 1%, we can see that the board members collectively own $45 million worth of stock (at today’s prices). Arguably, recent purchases and sales are equally important to consider. You can click here to see if insiders have bought or sold.

General public property

The general public, who are generally individual investors, hold 33% of the capital of 3M. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other major shareholders.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand 3M, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 3 warning signs with 3M and understanding them should be part of your investment process.

At the end of the day the future is the most important. You can access this free analyst forecast report for the company.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month the financial statements are dated. This may not be consistent with the annual report figures for the full year.

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