NexPoint Diversified Real Estate Trust’s (NYSE:NXDT) top owners are individual investors with 49% stake, while38% is held by institutions

To get a sense of who is truly in control of NexPoint Diversified Real Estate Trust (NYSE:NXDT), it is important to understand the ownership structure of the business. We can see that individual investors own the lion’s share in the company with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Meanwhile, institutions make up 38% of the company’s shareholders. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies.

Let’s take a closer look to see what the different types of shareholders can tell us about NexPoint Diversified Real Estate Trust.

See our latest analysis for NexPoint Diversified Real Estate Trust

ownership breakdown

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

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 NexPoint Diversified Real Estate Trust. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop almost. It’s therefore worth looking at NexPoint Diversified Real Estate Trust’s earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth

earnings-and-revenue-growth

NexPoint Diversified Real Estate Trust is not owned by hedge funds. The company’s CEO James Dondero is the largest shareholder with 12% of shares outstanding. In comparison, the second and third largest shareholders hold about 5.2% and 4.9% of the stock.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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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. Our information suggests that there isn’t any analyst coverage of the stock, so it’s probably little known.

Insider Ownership Of NexPoint Diversified Real Estate Trust

The definition of an insider may differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of NexPoint Diversified Real Estate Trust. It has a market capitalization of just US$498m, and insiders have US$62m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NexPoint Diversified Real Estate Trust. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

next steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example – NexPoint Diversified Real Estate Trust has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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