Question

Who would you consider the marginal investor for NIKE?

Answer 1

Before we answer this question, let's first understand who a marginal investor is.

Marginal investor is a very commonly used term in finance. it refers to an investor who

• Trades at margin
• Has the most influence on the trading price
• In a way sets the price in the market

It's very difficult to identify the marginal investor in a company. They are not easily identifiable. However, in the financial world, it's a global conclusion that:

• If the stocks of a company are significantly held by the institutional investors, then the marginal investor will be the institutional investor.
• if institutional investors are not there or are present insignificantly
  • And if a company is closely held by the promoters, their relatives, family members, top management (employees) etc and , then any one or more of these can be marginal investor(s)

We should now be ready to look into the question.

Who would you consider the marginal investor for NIKE?

Let's first examine the shareholders of NIKE:

• Based on the shareholding pattern of the company available on Nasdaq, Nike has institutional shareholding of 81.11%. There are some 1,572 institutional shareholders collectively holding 81.11%.
• The top 5 shareholders are:
  • The Vanguard Group, Inc. with 7.91% shareholding
  • Capital Research & Management Co. with 5.10% shareholding
  • SSgA Funds Management, Inc. with 4.67%
  • BlackRock Fund Advisors with 4.50%
  • Capital Research & Management Co. with 4.27%

Thus one or more of these institutional investors will be considered the marginal investor for NIKE.