Great week for New York Mortgage Trust, Inc. (NASDAQ:NYMT) institutional investors after losing 12% over the previous year

Key Insights

• Given the large stake in the stock by institutions, New York Mortgage Trust's stock price might be vulnerable to their trading decisions
• 48% of the business is held by the top 25 shareholders
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of New York Mortgage Trust, Inc. (NASDAQ:NYMT), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 54% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Last week's US$56m market cap gain would probably be appreciated by institutional investors, especially after a year of 12% losses.

In the chart below, we zoom in on the different ownership groups of New York Mortgage Trust.

Check out our latest analysis for New York Mortgage Trust

What Does The Institutional Ownership Tell Us About New York Mortgage Trust?

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.

We can see that New York Mortgage Trust does have institutional investors; and they hold a good portion of the company's stock. 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 New York Mortgage Trust's historic earnings and revenue below, but keep in mind there's always more to the story.

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 New York Mortgage Trust. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 17% of shares outstanding. For context, the second largest shareholder holds about 6.9% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of New York Mortgage Trust

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

We can report that insiders do own shares in New York Mortgage Trust, Inc.. In their own names, insiders own US$11m worth of stock in the US$754m 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, who are usually individual investors, hold a 44% stake in New York Mortgage Trust. 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. Take risks for example - New York Mortgage Trust has 2 warning signs we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.