Stock Analysis

Institutions along with retail investors who hold considerable shares inAres Commercial Real Estate Corporation (NYSE:ACRE) come under pressure; lose 13% of holdings value

NYSE:ACRE
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Key Insights

  • The considerable ownership by retail investors in Ares Commercial Real Estate indicates that they collectively have a greater say in management and business strategy
  • A total of 25 investors have a majority stake in the company with 40% ownership
  • 44% of Ares Commercial Real Estate is held by Institutions

To get a sense of who is truly in control of Ares Commercial Real Estate Corporation (NYSE:ACRE), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 52% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 44% came under pressure after market cap dropped to US$358m last week,retail investors took the most losses.

Let's delve deeper into each type of owner of Ares Commercial Real Estate, beginning with the chart below.

Check out our latest analysis for Ares Commercial Real Estate

ownership-breakdown
NYSE:ACRE Ownership Breakdown December 19th 2024

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

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.

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

earnings-and-revenue-growth
NYSE:ACRE Earnings and Revenue Growth December 19th 2024

Ares Commercial Real Estate is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 9.3% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.5% and 4.2%, of the shares outstanding, respectively.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Ares Commercial Real Estate

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own some shares in Ares Commercial Real Estate Corporation. In their own names, insiders own US$14m worth of stock in the US$358m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 52% of Ares Commercial Real Estate. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Ares Commercial Real Estate you should know about.

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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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.