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Key Insights

• Given the large stake in the stock by institutions, Two Harbors Investment's stock price might be vulnerable to their trading decisions

• 51% of the business is held by the top 13 shareholders

• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Two Harbors Investment Corp. (NYSE:TWO) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are institutions with 68% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Last week’s 7.6% gain means that institutional investors were on the positive end of the spectrum even as the company has shown strong longer-term trends. The one-year return on investment is currently 1.9% and last week's gain would have been more than welcomed.

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

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.

As you can see, institutional investors have a fair amount of stake in Two Harbors Investment. 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 Two Harbors Investment, (below). Of course, keep in mind that there are other factors to consider, too.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. We note that hedge funds don't have a meaningful investment in Two Harbors Investment. The company's largest shareholder is BlackRock, Inc., with ownership of 17%. In comparison, the second and third largest shareholders hold about 11% and 5.1% of the stock.

A closer look at our ownership figures suggests that the top 13 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.