Owning 49% shares,institutional owners seem interested in NexPoint Real Estate Finance, Inc. (NYSE:NREF),

editorial-team@simplywallst.com (Simply Wall St)

Thu, Dec 19, 2024, 7:46 AM 4 min read

Institutions' substantial holdings in NexPoint Real Estate Finance implies that they have significant influence over the company's share price
A total of 3 investors have a majority stake in the company with 61% ownership
Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of NexPoint Real Estate Finance, Inc. (NYSE:NREF) can tell us which group is most powerful. We can see that institutions own the lion's share in the company with 49% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.

Let's delve deeper into each type of owner of NexPoint Real Estate Finance, beginning with the chart below.

See our latest analysis for NexPoint Real Estate Finance

ownership-breakdown — NYSE:NREF Ownership Breakdown December 19th 2024

What Does The Institutional Ownership Tell Us About NexPoint Real Estate Finance?

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.

We can see that NexPoint Real Estate Finance 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 NexPoint Real Estate Finance's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth — NYSE:NREF Earnings and Revenue Growth December 19th 2024

It looks like hedge funds own 30% of NexPoint Real Estate Finance shares. That catches my attention because hedge funds sometimes try to influence management, or bring about changes that will create near term value for shareholders. Highland Capital Management, L.P. is currently the largest shareholder, with 30% of shares outstanding. In comparison, the second and third largest shareholders hold about 19% and 12% of the stock. Furthermore, CEO James Dondero is the owner of 2.3% of the company's shares.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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

Insider Ownership Of NexPoint Real Estate Finance

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.

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 most recent data indicates that insiders own some shares in NexPoint Real Estate Finance, Inc.. It has a market capitalization of just US$367m, and insiders have US$20m worth of shares, in their own names. It is good to see some investment by insiders, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in NexPoint Real Estate Finance. 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:

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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for NexPoint Real Estate Finance 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.