Institutional investors are Mr. Cooper Group Inc.'s (NASDAQ:COOP) biggest bettors and were rewarded after last week's US$817m market cap gain

By
Simply Wall St
Published
February 17, 2022
NasdaqCM:COOP
Source: Shutterstock

If you want to know who really controls Mr. Cooper Group Inc. (NASDAQ:COOP), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 76% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week’s 26% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 71% and last week's gain would have been more than welcomed.

In the chart below, we zoom in on the different ownership groups of Mr. Cooper Group.

Check out our latest analysis for Mr. Cooper Group

ownership-breakdown
NasdaqCM:COOP Ownership Breakdown February 17th 2022

What Does The Institutional Ownership Tell Us About Mr. Cooper Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

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

earnings-and-revenue-growth
NasdaqCM:COOP Earnings and Revenue Growth February 17th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. It would appear that 5.7% of Mr. Cooper Group shares are controlled by hedge funds. That's interesting, because hedge funds can be quite active and activist. Many look for medium term catalysts that will drive the share price higher. The company's largest shareholder is BlackRock, Inc., with ownership of 14%. Meanwhile, the second and third largest shareholders, hold 8.7% and 5.7%, of the shares outstanding, respectively. In addition, we found that Jay Bray, the CEO has 1.1% of the shares allocated to their name.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 12 shareholders, meaning that no single 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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Mr. Cooper Group

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 most recent data indicates that insiders own some shares in Mr. Cooper Group Inc.. The insiders have a meaningful stake worth US$156m. 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-- including retail investors -- own 14% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Mr. Cooper Group better, we need to consider many other factors. Be aware that Mr. Cooper Group is showing 3 warning signs in our investment analysis , and 2 of those are significant...

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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