Institutions own 47% of ARMOUR Residential REIT, Inc. (NYSE:ARR) shares but individual investors control 52% of the company
Key Insights
The considerable ownership by individual investors in ARMOUR Residential REIT indicates that they collectively have a greater say in management and business strategy
A total of 25 investors have a majority stake in the company with 42% ownership
Every investor in ARMOUR Residential REIT, Inc. (NYSE:ARR) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 52% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, institutions make up 47% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.
Let's delve deeper into each type of owner of ARMOUR Residential REIT, beginning with the chart below.
See our latest analysis for ARMOUR Residential REIT
What Does The Institutional Ownership Tell Us About ARMOUR Residential REIT?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
We can see that ARMOUR Residential REIT 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see ARMOUR Residential REIT's historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in ARMOUR Residential REIT. Our data shows that BlackRock, Inc. is the largest shareholder with 15% of shares outstanding. For context, the second largest shareholder holds about 10% of the shares outstanding, followed by an ownership of 2.9% by the third-largest shareholder.
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.
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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of ARMOUR Residential REIT
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 information suggests that ARMOUR Residential REIT, Inc. insiders own under 1% of the company. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own US$7.5m worth of shares. Arguably, recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
General Public Ownership
The general public -- including retail investors -- own 52% of ARMOUR Residential REIT. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with ARMOUR Residential REIT (including 2 which shouldn't be ignored) .
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.
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