Could H&R Real Estate Investment Trust’s (TSE:HR.UN) Investor Composition Influence The Stock Price?

The big shareholder groups in H&R Real Estate Investment Trust (TSE:HR.UN) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. We also tend to see lower insider ownership in companies that were previously publicly owned.

H&R Real Estate Investment Trust isn’t enormous, but it’s not particularly small either. It has a market capitalization of CA$2.7b, which means it would generally expect to see some institutions on the share registry. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about H&R Real Estate Investment Trust.

See our latest analysis for H&R Real Estate Investment Trust

TSX:HR.UN Ownership Summary April 8th 2020
TSX:HR.UN Ownership Summary April 8th 2020

What Does The Institutional Ownership Tell Us About H&R Real Estate Investment Trust?

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.

H&R Real Estate Investment Trust already has institutions on the share registry. Indeed, they own 28% of the company. 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. 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 H&R Real Estate Investment Trust’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

TSX:HR.UN Income Statement April 8th 2020
TSX:HR.UN Income Statement April 8th 2020

Hedge funds don’t have many shares in H&R Real Estate Investment Trust. BlackRock, Inc. is currently the company’s largest shareholder with 4.1% of shares outstanding. With 3.6% and 3.3% of the shares outstanding respectively, The Vanguard Group, Inc. and Canadian Realty Advisors Limited are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than 50% 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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of H&R Real Estate Investment Trust

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.

I can report that insiders do own shares in H&R Real Estate Investment Trust. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around CA$52m worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 66% of H&R Real Estate Investment Trust shares. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 3.3%, of the shares on issue. It’s hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand H&R Real Estate Investment Trust better, we need to consider many other factors. For example, we’ve discovered 4 warning signs for H&R Real Estate Investment Trust (1 is significant!) that you should be aware of before investing here.

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.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.