Is SmartCentres Real Estate Investment Trust (TSE:SRU.UN) Popular Amongst Insiders?

By
Simply Wall St
Published
November 06, 2020
TSX:SRU.UN

The big shareholder groups in SmartCentres Real Estate Investment Trust (TSE:SRU.UN) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

SmartCentres Real Estate Investment Trust has a market capitalization of CA$3.7b, so we would expect some institutional investors to have noticed the stock. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about SmartCentres Real Estate Investment Trust.

See our latest analysis for SmartCentres Real Estate Investment Trust

ownership-breakdown
TSX:SRU.UN Ownership Breakdown November 6th 2020

What Does The Institutional Ownership Tell Us About SmartCentres 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.

SmartCentres Real Estate Investment Trust already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 SmartCentres Real Estate Investment Trust's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
TSX:SRU.UN Earnings and Revenue Growth November 6th 2020

SmartCentres Real Estate Investment Trust is not owned by hedge funds. Our data shows that Mitchell Goldhar is the largest shareholder with 10% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.9% and 3.9% of the stock.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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

Insider Ownership Of SmartCentres 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.

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 some shares in SmartCentres Real Estate Investment Trust. The insiders have a meaningful stake worth CA$327m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 51% of SmartCentres Real Estate Investment Trust shares. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand SmartCentres Real Estate Investment Trust better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for SmartCentres Real Estate Investment Trust you should be aware of, and 1 of them shouldn't be ignored.

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. 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.
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