Stock Analysis

With 89% institutional ownership, Growthpoint Properties Limited (JSE:GRT) is a favorite amongst the big guns

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Key Insights

  • Institutions' substantial holdings in Growthpoint Properties implies that they have significant influence over the company's share price
  • A total of 10 investors have a majority stake in the company with 52% ownership
  • Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

If you want to know who really controls Growthpoint Properties Limited (JSE:GRT), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 89% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Given the vast amount of money and research capacities at their disposal, institutional ownership tends to carry a lot of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

In the chart below, we zoom in on the different ownership groups of Growthpoint Properties.

See our latest analysis for Growthpoint Properties

JSE:GRT Ownership Breakdown March 15th 2023

What Does The Institutional Ownership Tell Us About Growthpoint Properties?

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 Growthpoint Properties 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. 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 Growthpoint Properties' earnings history below. Of course, the future is what really matters.

JSE:GRT Earnings and Revenue Growth March 15th 2023

Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Growthpoint Properties is not owned by hedge funds. Our data shows that Public Investment Corporation Limited is the largest shareholder with 14% of shares outstanding. The second and third largest shareholders are Ninety One UK Limited and Sesfikile Capital (Pty) Ltd, with an equal amount of shares to their name at 5.0%.

We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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 Growthpoint Properties

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our data suggests that insiders own under 1% of Growthpoint Properties Limited 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 R87m worth of shares (at current prices). 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

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Growthpoint Properties. 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 Growthpoint Properties better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Growthpoint Properties you should be aware of, and 2 of them don't sit too well with us.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

Valuation is complex, but we're helping make it simple.

Find out whether Growthpoint Properties is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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Growthpoint Properties

Growthpoint is the largest South African primary JSE-listed REIT with a quality portfolio of 440 directly owned properties in South Africa (RSA) valued at R73.4bn, including four hospitals and one medical chambers valued at R2.6bn owned by Growthpoint Healthcare Property Holdings (RF) Limited (GHPH).

Average dividend payer with acceptable track record.