The big shareholder groups in Cherry Hill Mortgage Investment Corporation (NYSE:CHMI) have power over the company. 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.
With a market capitalization of US$164m, Cherry Hill Mortgage Investment is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let’s take a closer look to see what the different types of shareholders can tell us about Cherry Hill Mortgage Investment.
See our latest analysis for Cherry Hill Mortgage Investment
What Does The Institutional Ownership Tell Us About Cherry Hill Mortgage Investment?
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.
As you can see, institutional investors have a fair amount of stake in Cherry Hill Mortgage Investment. 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 Cherry Hill Mortgage Investment’s earnings history below. Of course, the future is what really matters.
It looks like hedge funds own 6.2% of Cherry Hill Mortgage Investment shares. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. The company’s largest shareholder is BlackRock, Inc., with ownership of 9.2%. The Vanguard Group, Inc. is the second largest shareholder owning 6.9% of common stock, and Renaissance Technologies Corp. holds about 6.4% of the company stock.
A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.
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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Cherry Hill Mortgage Investment
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
I can report that insiders do own shares in Cherry Hill Mortgage Investment Corporation. As individuals, the insiders collectively own US$11m worth of the US$164m company. It is good to see some investment by insiders, but I usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.
General Public Ownership
The general public holds a 45% stake in Cherry Hill Mortgage Investment. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example – Cherry Hill Mortgage Investment has 3 warning signs (and 2 which are potentially serious) we think you should know about.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
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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