Stock Analysis

Can We See Significant Institutional Ownership On The Deutsche Wohnen SE (ETR:DWNI) Share Register?

XTRA:DWNI
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Every investor in Deutsche Wohnen SE (ETR:DWNI) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.

With a market capitalization of €14b, Deutsche Wohnen is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too. In the chart below, we can see that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Deutsche Wohnen.

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XTRA:DWNI Ownership Summary June 30th 2020
XTRA:DWNI Ownership Summary June 30th 2020

What Does The Institutional Ownership Tell Us About Deutsche Wohnen?

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 own 61% of Deutsche Wohnen. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Deutsche Wohnen, (below). Of course, keep in mind that there are other factors to consider, too.

XTRA:DWNI Income Statement June 30th 2020
XTRA:DWNI Income Statement June 30th 2020

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Deutsche Wohnen is not owned by hedge funds. BlackRock, Inc. is currently the largest shareholder, with 11% of shares outstanding. Next, we have MFS Investment Management, Inc. and Norges Bank Investment Management as the second and third largest shareholders, holding 8.2% and 7.2%, of the shares outstanding, respectively.

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.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Deutsche Wohnen

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that Deutsche Wohnen SE insiders own under 1% of the company. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own €4.1m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public holds a 39% stake in DWNI. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 4 warning signs we've spotted with Deutsche Wohnen (including 1 which is makes us a bit uncomfortable) .

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.

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