Every investor in Preferred Apartment Communities, Inc. (NYSE:APTS) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Companies that used to be publicly owned tend to have lower insider ownership.
Preferred Apartment Communities is a smaller company with a market capitalization of US$623m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions are noticeable on the share registry. Let’s delve deeper into each type of owner, to discover more about Preferred Apartment Communities.
View 4 warning signs we detected for Preferred Apartment Communities
What Does The Institutional Ownership Tell Us About Preferred Apartment Communities?
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.
Preferred Apartment Communities already has institutions on the share registry. Indeed, they own 61% of the company. 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. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Preferred Apartment Communities’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don’t have many shares in Preferred Apartment Communities. The Vanguard Group, Inc. is currently the company’s largest shareholder with 9.8% of shares outstanding, With 7.5% and 4.6% of the shares outstanding respectively, BlackRock, Inc. and LSV Asset Management are the second and third largest shareholders.
A deeper look at our ownership data shows that the top 15 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Preferred Apartment Communities
The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.
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 Preferred Apartment Communities, Inc. insiders own under 1% of the company. It seems the board members have no more than US$6.0m worth of shares in the US$623m company. When analysing a company, looking at ownership may seem a logical place to start. But ultimately, many risks exist within the business itself, rather than its shareholders. For example, we’ve discovered 4 warning signs for Preferred Apartment Communities (of which 1 is major) which any shareholder or potential investor should be aware of.
General Public Ownership
With a 36% ownership, the general public have some degree of sway over APTS. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
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.
I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
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.
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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