Could Heritage Insurance Holdings, Inc.’s (NYSE:HRTG) Investor Composition Influence The Stock Price?

A look at the shareholders of Heritage Insurance Holdings, Inc. (NYSE:HRTG) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

Heritage Insurance Holdings is not a large company by global standards. It has a market capitalization of US$350m, which means it wouldn’t have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let’s take a closer look to see what the different types of shareholder can tell us about Heritage Insurance Holdings.

View our latest analysis for Heritage Insurance Holdings

NYSE:HRTG Ownership Summary, February 25th 2020
NYSE:HRTG Ownership Summary, February 25th 2020

What Does The Institutional Ownership Tell Us About Heritage Insurance Holdings?

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.

Heritage Insurance Holdings already has institutions on the share registry. Indeed, they own 69% of the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Heritage Insurance Holdings’s earnings history, below. Of course, the future is what really matters.

NYSE:HRTG Income Statement, February 25th 2020
NYSE:HRTG Income Statement, February 25th 2020

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Heritage Insurance Holdings is not owned by hedge funds. BlackRock, Inc. is currently the largest shareholder, with 7.4% of shares outstanding. Dimensional Fund Advisors L.P. is the second largest shareholder with 4.9% of common stock, followed by The Vanguard Group, Inc., holding 4.1% of the stock.

A closer look at our ownership figures suggests that the top 19 shareholders have a combined ownership of 51% implying that no one share holder has a majority.

Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Heritage Insurance Holdings

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.

Our information suggests that insiders maintain a significant holding in Heritage Insurance Holdings, Inc.. It has a market capitalization of just US$350m, and insiders have US$48m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public holds a 17% stake in HRTG. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Like risks, for instance. Every company has them, and we’ve spotted 4 warning signs for Heritage Insurance Holdings (of which 1 doesn’t sit too well with us!) you should know about.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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