Owning 74% in Heriot REIT Limited (JSE:HET) means that insiders are heavily invested in the company's future
Heriot REIT's significant insider ownership suggests inherent interests in company's expansion
Steven Herring owns 70% of the company
Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock
We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.
If you want to know who really controls Heriot REIT Limited (JSE:HET), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 74% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).
So it follows, every decision made by insiders of Heriot REIT regarding the company's future would be crucial to them.
Let's take a closer look to see what the different types of shareholders can tell us about Heriot REIT.
Check out our latest analysis for Heriot REIT
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Heriot REIT's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.
We note that hedge funds don't have a meaningful investment in Heriot REIT. Looking at our data, we can see that the largest shareholder is Steven Herring with 70% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. In comparison, the second and third largest shareholders hold about 4.4% and 0.09% of the stock. Richard Herring, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
It seems that insiders own more than half the Heriot REIT Limited stock. This gives them a lot of power. So they have a R3.8b stake in this R5.1b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
The general public-- including retail investors -- own 26% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Heriot REIT is showing 5 warning signs in our investment analysis , and 2 of those are concerning...
If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.
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