Newmark Group, Inc.'s (NASDAQ:NMRK) recent 5.5% pullback adds to one-year year losses, institutional owners may take drastic measures

By
Simply Wall St
Published
May 22, 2022
NasdaqGS:NMRK
Source: Shutterstock

To get a sense of who is truly in control of Newmark Group, Inc. (NASDAQ:NMRK), it is important to understand the ownership structure of the business. With 61% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And institutional investors saw their holdings value drop by 5.5% last week. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 15% might not go down well especially with this category of 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 downtrend continues, institutions may face pressures to sell Newmark Group, which might have negative implications on individual investors.

Let's delve deeper into each type of owner of Newmark Group, beginning with the chart below.

See our latest analysis for Newmark Group

ownership-breakdown
NasdaqGS:NMRK Ownership Breakdown May 22nd 2022

What Does The Institutional Ownership Tell Us About Newmark Group?

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.

As you can see, institutional investors have a fair amount of stake in Newmark Group. 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. 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 Newmark Group's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:NMRK Earnings and Revenue Growth May 22nd 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in Newmark Group. The Vanguard Group, Inc. is currently the largest shareholder, with 14% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 6.0%, of the shares outstanding, respectively. In addition, we found that Barry Gosin, the CEO has 2.2% of the shares allocated to their name.

After doing some more digging, we found that the top 11 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Newmark Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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.

We can see that insiders own shares in Newmark Group, Inc.. The insiders have a meaningful stake worth US$134m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Newmark Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 12%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

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. Take risks for example - Newmark Group has 4 warning signs (and 3 which shouldn't be ignored) we think you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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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