Key Insights
- Significantly high institutional ownership implies NexPoint Real Estate Finance's stock price is sensitive to their trading actions
- 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
If you want to know who really controls NexPoint Real Estate Finance, Inc. (NYSE:NREF), then you'll have to look at the makeup of its share registry. With 34% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Losing money on investments is something no shareholder enjoys, least of all institutional investors who saw their holdings value drop by 13% last week. However, the 15% one-year returns may have helped alleviate their overall losses. They should, however, be mindful of further losses in the future.
Let's delve deeper into each type of owner of NexPoint Real Estate Finance, beginning with the chart below.
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 suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 NexPoint Real Estate Finance's earnings history below. Of course, the future is what really matters.
It looks like hedge funds own 32% of NexPoint Real Estate Finance shares. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. Highland Capital Management, L.P. is currently the company's largest shareholder with 32% of shares outstanding. With 12% and 4.3% of the shares outstanding respectively, NexPoint Real Estate Opportunities, LLC and NexPoint Advisors, L.P. are the second and third largest shareholders. Additionally, the company's CEO James Dondero directly holds 2.8% of the total shares outstanding.
Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.
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 NexPoint Real Estate Finance
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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.
We can report that insiders do own shares in NexPoint Real Estate Finance, Inc.. It has a market capitalization of just US$322m, and insiders have US$22m 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
With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NexPoint Real Estate Finance. 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:
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with NexPoint Real Estate Finance .
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts .
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.