How Many Ares Commercial Real Estate Corporation (NYSE:ACRE) Shares Do Institutions Own?

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Simply Wall St

Fri, Jan 1, 2021, 11:04 PM 4 min read

A look at the shareholders of Ares Commercial Real Estate Corporation (NYSE:ACRE) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. We also tend to see lower insider ownership in companies that were previously publicly owned.

Ares Commercial Real Estate is a smaller company with a market capitalization of US$396m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Ares Commercial Real Estate.

View our latest analysis for Ares Commercial Real Estate

ownership-breakdown — NYSE:ACRE Ownership Breakdown January 2nd 2021

What Does The Institutional Ownership Tell Us About Ares Commercial Real Estate?

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.

Ares Commercial Real Estate already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Ares Commercial Real Estate's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — NYSE:ACRE Earnings and Revenue Growth January 2nd 2021

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Ares Commercial Real Estate is not owned by hedge funds. BlackRock, Inc. is currently the company's largest shareholder with 9.4% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.0% and 4.8% of the stock.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 21 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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

Insider Ownership Of Ares Commercial Real Estate

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

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.

I can report that insiders do own shares in Ares Commercial Real Estate Corporation. As individuals, the insiders collectively own US$18m worth of the US$396m company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.

General Public Ownership

With a 34% ownership, the general public have some degree of sway over Ares Commercial Real Estate. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 4 warning signs for Ares Commercial Real Estate you should be aware of, and 2 of them are potentially serious.

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.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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