Institutional owners may consider drastic measures as Franklin BSP Realty Trust, Inc.'s (NYSE:FBRT) recent US$89m drop adds to long-term losses

Key Insights

• Significantly high institutional ownership implies Franklin BSP Realty Trust's stock price is sensitive to their trading actions
• 50% of the business is held by the top 18 shareholders
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in Franklin BSP Realty Trust, Inc. (NYSE:FBRT) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 61% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, institutional investors endured the highest losses last week after market cap fell by US$89m. The recent loss, which adds to a one-year loss of 0.2% for stockholders, may not sit well with this group of investors. Often called “market movers", institutions wield significant power in influencing the price dynamics of any stock. As a result, if the decline continues, institutional investors may be pressured to sell Franklin BSP Realty Trust which might hurt individual investors.

Let's delve deeper into each type of owner of Franklin BSP Realty Trust, beginning with the chart below.

See our latest analysis for Franklin BSP Realty Trust

What Does The Institutional Ownership Tell Us About Franklin BSP Realty Trust?

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.

We can see that Franklin BSP Realty Trust does have institutional investors; and they hold a good portion of the company's stock. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Franklin BSP Realty Trust, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Franklin BSP Realty Trust. BlackRock, Inc. is currently the company's largest shareholder with 17% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 4.0% of the stock.

After doing some more digging, we found that the top 18 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 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 Franklin BSP Realty 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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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 data suggests that insiders own under 1% of Franklin BSP Realty Trust, Inc. in their own names. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around US$7.3m worth of shares (at current prices). It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 38% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Franklin BSP Realty Trust. 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 Franklin BSP Realty Trust better, we need to consider many other factors. For example, we've discovered 2 warning signs for Franklin BSP Realty Trust (1 is a bit concerning!) that you should be aware of before investing here.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com