Stock Analysis

What Kind Of Investors Own Most Of Two Harbors Investment Corp. (NYSE:TWO)?

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NYSE:TWO
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Every investor in Two Harbors Investment Corp. (NYSE:TWO) 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. We also tend to see lower insider ownership in companies that were previously publicly owned.

With a market capitalization of US$1.7b, Two Harbors Investment is a decent size, so it is probably on the radar of institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutions are noticeable on the share registry. Let's take a closer look to see what the different types of shareholders can tell us about Two Harbors Investment.

Check out our latest analysis for Two Harbors Investment

ownership-breakdown
NYSE:TWO Ownership Breakdown January 5th 2021

What Does The Institutional Ownership Tell Us About Two Harbors Investment?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Two Harbors Investment 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. 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 Two Harbors Investment's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:TWO Earnings and Revenue Growth January 5th 2021

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in Two Harbors Investment. Our data shows that BlackRock, Inc. is the largest shareholder with 9.4% of shares outstanding. With 9.0% and 3.4% of the shares outstanding respectively, The Vanguard Group, Inc. and Goldman Sachs Asset Management, L.P. are the second and third largest shareholders.

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

Insider Ownership Of Two Harbors Investment

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 less than 1% of Two Harbors Investment Corp.. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$15m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, with a 38% stake in the company, will not easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Two Harbors Investment better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Two Harbors Investment (at least 2 which shouldn't be ignored) , and understanding them should be part of your investment process.

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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