Yahoo Finance NexPoint Real Estate Finance, Inc. (NYSE:NREF) is definitely on the radar of institutional investors who own 34% of the company
Key Insights
Institutions' substantial holdings in NexPoint Real Estate Finance implies that they have significant influence over the company's share price
The top 4 shareholders own 52% of the company
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
Every investor in NexPoint Real Estate Finance, Inc. (NYSE:NREF) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 34% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with 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 NexPoint Real Estate Finance.
View our latest analysis for NexPoint Real Estate Finance
What Does The Institutional Ownership Tell Us About NexPoint Real Estate Finance?
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.
We can see that NexPoint Real Estate Finance does have institutional investors; and they hold a good portion of the company's stock. 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 NexPoint Real Estate Finance, (below). Of course, keep in mind that there are other factors to consider, too.
It looks like hedge funds own 32% of NexPoint Real Estate Finance shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Highland Capital Management, L.P. is currently the company's largest shareholder with 32% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 12% and 4.3%, of the shares outstanding, respectively. Additionally, the company's CEO James Dondero directly holds 2.3% of the total shares outstanding.
To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 NexPoint Real Estate Finance
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.
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 NexPoint Real Estate Finance, Inc.. It has a market capitalization of just US$310m, and insiders have US$17m worth of shares, in their own names. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 3 warning signs for NexPoint Real Estate Finance (2 can't be ignored) that you should be aware of.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
