Institutional investors may adopt severe steps after Invesco Mortgage Capital Inc.'s (NYSE:IVR) latest 11% drop adds to a year losses

By
Simply Wall St
Published
May 11, 2022
NYSE:IVR
Source: Shutterstock

If you want to know who really controls Invesco Mortgage Capital Inc. (NYSE:IVR), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 53% to be precise, is institutions. Put another way, the group faces the maximum upside potential (or downside risk).

And institutional investors saw their holdings value drop by 11% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 47% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the decline continues, institutional investors may be pressured to sell Invesco Mortgage Capital which might hurt individual investors.

Let's take a closer look to see what the different types of shareholders can tell us about Invesco Mortgage Capital.

View our latest analysis for Invesco Mortgage Capital

ownership-breakdown
NYSE:IVR Ownership Breakdown May 11th 2022

What Does The Institutional Ownership Tell Us About Invesco Mortgage Capital?

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.

Invesco Mortgage Capital 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. 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 Invesco Mortgage Capital, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NYSE:IVR Earnings and Revenue Growth May 11th 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in Invesco Mortgage Capital. BlackRock, Inc. is currently the largest shareholder, with 16% of shares outstanding. With 10.0% and 3.2% of the shares outstanding respectively, The Vanguard Group, Inc. and State Street Global Advisors, Inc. are the second and third largest shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Invesco Mortgage Capital

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.

Our data suggests that insiders own under 1% of Invesco Mortgage Capital Inc. in their own names. It seems the board members have no more than US$973k worth of shares in the US$544m company. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 47% stake in Invesco Mortgage Capital. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For instance, we've identified 4 warning signs for Invesco Mortgage Capital (1 shouldn't be ignored) that you should be aware of.

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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