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If you want to know who really controls PennyMac Mortgage Investment Trust (NYSE:PMT), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are institutions with 72% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
And so it follows that institutional investors was the group most impacted after the company's market cap fell to US$1.1b last week after a 4.8% drop in the share price. The recent loss, which adds to a one-year loss of 0.7% for stockholders, may not sit well with this group of investors. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell PennyMac Mortgage Investment Trust which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about PennyMac Mortgage Investment Trust.
View our latest analysis for PennyMac Mortgage Investment 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.
We can see that PennyMac Mortgage Investment Trust 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 PennyMac Mortgage Investment Trust's earnings history below. Of course, the future is what really matters.
Institutional investors own over 50% of the company, so together than can probably strongly influence board decisions. Hedge funds don't have many shares in PennyMac Mortgage Investment Trust. BlackRock, Inc. is currently the largest shareholder, with 17% of shares outstanding. The Vanguard Group, Inc. is the second largest shareholder owning 11% of common stock, and T. Rowe Price Group, Inc. holds about 6.9% of the company stock.
After doing some more digging, we found that the top 11 have the combined ownership of 51% in the company, suggesting that no single shareholder has significant control over the company.
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.
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
Shareholders would probably be interested to learn that insiders own shares in PennyMac Mortgage Investment Trust. This is a big company, so it is good to see this level of alignment. Insiders own US$13m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.
The general public-- including retail investors -- own 27% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
It's always worth thinking about the different groups who own shares in a company. But to understand PennyMac Mortgage Investment Trust better, we need to consider many other factors. Be aware that PennyMac Mortgage Investment Trust is showing 4 warning signs in our investment analysis , and 3 of those shouldn't be ignored...
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.
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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