Institutional shareholders may be less affected by Charter Hall Long WALE REIT's (ASX:CLW) pullback last week after a year of 7.7% returns

By
Simply Wall St
Published
May 09, 2022
ASX:CLW
Source: Shutterstock

To get a sense of who is truly in control of Charter Hall Long WALE REIT (ASX:CLW), it is important to understand the ownership structure of the business. With 51% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Institutional investors endured the highest losses after the company's market cap fell by AU$195m last week. However, the 7.7% one-year return to shareholders might have softened the blow. But they would probably be wary of future losses.

Let's take a closer look to see what the different types of shareholders can tell us about Charter Hall Long WALE REIT.

View our latest analysis for Charter Hall Long WALE REIT

ownership-breakdown
ASX:CLW Ownership Breakdown May 9th 2022

What Does The Institutional Ownership Tell Us About Charter Hall Long WALE REIT?

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 Charter Hall Long WALE REIT. 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 Charter Hall Long WALE REIT's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
ASX:CLW Earnings and Revenue Growth May 9th 2022

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 Charter Hall Long WALE REIT. Charter Hall Funds Management Ltd. is currently the company's largest shareholder with 9.8% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 7.6% of common stock, and State Street Global Advisors, Inc. holds about 5.2% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Charter Hall Long WALE REIT

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. 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.

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 most recent data indicates that insiders own less than 1% of Charter Hall Long WALE REIT. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around AU$5.9m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 49% stake in Charter Hall Long WALE REIT. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Charter Hall Long WALE REIT better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for Charter Hall Long WALE REIT you should be aware of, and 2 of them are potentially serious.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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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