Stock Analysis

Are Institutions Heavily Invested In Choice Properties Real Estate Investment Trust's (TSE:CHP.UN) Shares?

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TSX:CHP.UN
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Every investor in Choice Properties Real Estate Investment Trust (TSE:CHP.UN) should be aware of the most powerful shareholder groups. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Choice Properties Real Estate Investment Trust is a pretty big company. It has a market capitalization of CA$9.1b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions are noticeable on the share registry. We can zoom in on the different ownership groups, to learn more about Choice Properties Real Estate Investment Trust.

See our latest analysis for Choice Properties Real Estate Investment Trust

TSX:CHP.UN Ownership Breakdown July 7th 2020
TSX:CHP.UN Ownership Breakdown July 7th 2020

What Does The Institutional Ownership Tell Us About Choice Properties Real Estate Investment Trust?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Choice Properties Real Estate Investment Trust does have institutional investors; and they hold a good portion of the company's stock. 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 Choice Properties Real Estate Investment Trust's earnings history, below. Of course, the future is what really matters.

TSX:CHP.UN Earnings and Revenue Growth July 7th 2020
TSX:CHP.UN Earnings and Revenue Growth July 7th 2020

We note that hedge funds don't have a meaningful investment in Choice Properties Real Estate Investment Trust. The company's largest shareholder is Wittington Investments Limited, with ownership of 16%. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 3.2% by the third-largest shareholder.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 22 shareholders, meaning that no one shareholder has a majority interest in the ownership.

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. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of Choice Properties Real Estate Investment Trust

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

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 Choice Properties Real Estate Investment Trust in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Keep in mind that it's a big company, and the insiders own CA$18m worth of shares. The absolute value might be more important than the proportional share. 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 holds a 21% stake in CHP.UN. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 7.2%, of the CHP.UN stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Choice Properties Real Estate Investment Trust (of which 1 shouldn't be ignored!) you should know about.

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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