Stock Analysis

How Much Of Reit 1 Ltd (TLV:RIT1) Do Institutions Own?

TASE:RIT1
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Every investor in Reit 1 Ltd (TLV:RIT1) 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. We also tend to see lower insider ownership in companies that were previously publicly owned.

Reit 1 isn't enormous, but it's not particularly small either. It has a market capitalization of ₪2.8b, which means it would generally expect to see some institutions on the share registry. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Reit 1.

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ownership-breakdown
TASE:RIT1 Ownership Breakdown November 27th 2020

What Does The Institutional Ownership Tell Us About Reit 1?

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.

As you can see, institutional investors have a fair amount of stake in Reit 1. 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 Reit 1's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
TASE:RIT1 Earnings and Revenue Growth November 27th 2020

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. We note that hedge funds don't have a meaningful investment in Reit 1. Looking at our data, we can see that the largest shareholder is Altshuler Shaham Ltd. with 16% of shares outstanding. Menora Mivtachim Pensions & Gemel Ltd. is the second largest shareholder owning 7.8% of common stock, and Harel Pensions and Gemel Ltd. holds about 6.9% of the company stock. Additionally, the company's CEO Shmuel Sayad directly holds 0.6% of the total shares outstanding.

We did some more digging and found that 7 of the top shareholders account for roughly 51% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Reit 1

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

I can report that insiders do own shares in Reit 1 Ltd. As individuals, the insiders collectively own ₪33m worth of the ₪2.8b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

The general public holds a 31% stake in Reit 1. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we've discovered 3 warning signs for Reit 1 (1 is significant!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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