Stock Analysis

Is Hersha Hospitality Trust's (NYSE:HT) Shareholder Ownership Skewed Towards Insiders?

NYSE:HT
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The big shareholder groups in Hersha Hospitality Trust (NYSE:HT) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Hersha Hospitality Trust is a smaller company with a market capitalization of US$368m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Hersha Hospitality Trust.

View our latest analysis for Hersha Hospitality Trust

ownership-breakdown
NYSE:HT Ownership Breakdown February 10th 2021

What Does The Institutional Ownership Tell Us About Hersha Hospitality Trust?

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.

We can see that Hersha Hospitality Trust 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 Hersha Hospitality Trust's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NYSE:HT Earnings and Revenue Growth February 10th 2021

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 Hersha Hospitality Trust. Looking at our data, we can see that the largest shareholder is BlackRock, Inc. with 15% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 11% of common stock, and State Street Global Advisors, Inc. holds about 3.9% of the company stock. Additionally, the company's CEO Jay Shah directly holds 1.5% of the total shares outstanding.

After doing some more digging, we found that the top 16 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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Hersha Hospitality 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. 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.

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.

I can report that insiders do own shares in Hersha Hospitality Trust. As individuals, the insiders collectively own US$21m worth of the US$368m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 25% ownership, the general public have some degree of sway over Hersha Hospitality Trust. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 4 warning signs for Hersha Hospitality Trust (of which 1 can't be ignored!) 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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