KKR Real Estate Finance Trust Inc.’s (NYSE:KREF) institutional investors lost 5.5% over the past week but have profited from longer-term gains
To get a sense of who is really in control of KKR Real Estate Finance Trust Inc. (NYSE: KREF), it is important to understand the ownership structure of the company. We see that institutions own the lion’s share of the company at 56%. In other words, the group will gain (or lose most) most of its investment in the company.
No shareholder likes to lose money on their investments, especially institutional investors who saw their holdings drop in value by 5.5% last week. However, the 20% annual returns could have helped mitigate their overall losses. But they would likely be wary of future losses.
Let’s dig deeper into each of the types of KKR Real Estate Finance Trust owners, starting with the table below.
Check out our latest analysis for the KKR Real Estate Finance Trust
NYSE: KREF Property Breakdown December 2, 2021
What does institutional ownership tell us about the KKR Real Estate Finance Trust?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they are often more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutes on the register, especially as they grow.
As you can see, institutional investors have a fair share of the KKR Real Estate Finance Trust. This implies that the analysts at these institutions have looked at the stock and like it. But like everyone else, they can be wrong too. It is not uncommon for the stock price to drop sharply when two large institutional investors are trying to sell a stock at the same time. So it is worth checking the earnings history of the KKR Real Estate Finance Trust (below) so far. Of course, keep in mind that there are other factors to consider as well.
Investors should note that institutions actually own more than half of the company, so together they can exert significant power. Please note that hedge funds do not make a sensible investment in the KKR Real Estate Finance Trust. If we look at our data, we can see that the largest shareholder is KKR & Co. Inc. with 23% of the shares outstanding. In comparison, the second and third largest shareholders hold around 11% and 6.5% of the shares, respectively.
On closer inspection, we found that 50% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the company’s decisions.
Studying institutional ownership is a great way to measure and filter the expected performance of a stock. The same can be achieved by examining the sentiments of the analysts. There are plenty of analysts covering the stock so it might be worthwhile to see what they are forecasting as well.
KKR Real Estate Finance Trust’s inside ownership
The definition of an insider can vary slightly from country to country, but board members always count. Management ultimately replies to the board. However, it is not uncommon for managers to be board members, especially when they are founders or CEOs.
Insider ownership is positive when it signals that management thinks like the real owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative under certain circumstances.
We can see that insiders own shares in KKR Real Estate Finance Trust Inc. It’s a pretty big company, so it’s generally positive to see potentially meaningful alignment. In this case, they own approximately $ 16 million worth of shares (at current prices). If you’d like to investigate the insider alignment issue, you can click here to see if insiders bought or sold.
General public property
With a 20% stake, the general public, composed mostly of individual investors, has some leverage over the KKR Real Estate Finance Trust. While this size of ownership is substantial, it may not be enough to change company policy if the decision does not coincide with other major shareholders.
Private equity ownership
With a stake of 23%, private equity firms could influence the board of the KKR Real Estate Finance Trust. Some may like this because private equity are sometimes activists who hold management accountable. But other times, private equity sells out as the company goes public.
Next Steps:
I find it very interesting to see who exactly owns a company. But to really gain insight, we need to consider other information as well. Take risks, for example – KKR Real Estate Finance Trust has 4 warning signs (and 2 that matter) we think you should know.
If you’d rather find out what analysts are predicting in terms of future growth, don’t miss out for free Report on analyst forecast.
Note: The numbers in this article are calculated using data from the past twelve months, which refers to the twelve month period ending on the last day of the month in which the financial statements are dated. This may not match the figures in the financial statements.
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