Here's What Ares Commercial Real Estate Corporation's (NYSE:ACRE) Shareholder Ownership Structure Looks Like

By
Simply Wall St
Published
April 04, 2021
NYSE:ACRE
Source: Shutterstock

Every investor in Ares Commercial Real Estate Corporation (NYSE:ACRE) 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. Companies that have been privatized tend to have low insider ownership.

Ares Commercial Real Estate is a smaller company with a market capitalization of US$560m, so it may still be flying under the radar of many institutional investors. 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 Ares Commercial Real Estate.

See our latest analysis for Ares Commercial Real Estate

ownership-breakdown
NYSE:ACRE Ownership Breakdown April 4th 2021

What Does The Institutional Ownership Tell Us About Ares Commercial Real Estate?

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.

Ares Commercial Real Estate already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Ares Commercial Real Estate's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:ACRE Earnings and Revenue Growth April 4th 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Ares Commercial Real Estate is not owned by hedge funds. BlackRock, Inc. is currently the company's largest shareholder with 8.0% of shares outstanding. The second and third largest shareholders are Delphi Financial Group, Inc, Asset Management Arm and The Vanguard Group, Inc., with an equal amount of shares to their name at 3.8%.

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 Ares Commercial Real Estate

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.

Shareholders would probably be interested to learn that insiders own shares in Ares Commercial Real Estate Corporation. It has a market capitalization of just US$560m, and insiders have US$22m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 44% ownership, the general public have some degree of sway over Ares Commercial Real Estate. 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 Ares Commercial Real Estate better, we need to consider many other factors. Be aware that Ares Commercial Real Estate is showing 3 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

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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