Institutional investors in Growthpoint Properties Australia (ASX:GOZ) lost 3.6% last week but have reaped the benefits of longer-term growth

Key Insights

• Given the large stake in the stock by institutions, Growthpoint Properties Australia's stock price might be vulnerable to their trading decisions
• 64% of the company is held by a single shareholder (Growthpoint Properties Limited)
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

Every investor in Growthpoint Properties Australia (ASX:GOZ) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 74% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors was the group most impacted after the company's market cap fell to AU$2.0b last week. However, the 39% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

Let's take a closer look to see what the different types of shareholders can tell us about Growthpoint Properties Australia.

View our latest analysis for Growthpoint Properties Australia

What Does The Institutional Ownership Tell Us About Growthpoint Properties Australia?

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 Growthpoint Properties Australia. 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 Growthpoint Properties Australia'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. We note that hedge funds don't have a meaningful investment in Growthpoint Properties Australia. The company's largest shareholder is Growthpoint Properties Limited, with ownership of 64%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. With 3.5% and 1.5% of the shares outstanding respectively, The Vanguard Group, Inc. and Sumitomo Mitsui DS Asset Management Company, Limited are the second and third largest shareholders.

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. 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 Growthpoint Properties Australia

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Our data suggests that insiders own under 1% of Growthpoint Properties Australia in their own names. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own AU$16m worth of shares. 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-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Growthpoint Properties Australia (1 is concerning) that you should be aware of.

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.

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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.