Lument Finance Trust, Inc. (NYSE:LFT) is definitely on the radar of institutional investors who own 41% of the company
Key Insights
Given the large stake in the stock by institutions, Lument Finance Trust's stock price might be vulnerable to their trading decisions
The top 5 shareholders own 51% of the company
A look at the shareholders of Lument Finance Trust, Inc. (NYSE:LFT) can tell us which group is most powerful. The group holding the most number of shares in the company, around 41% to be precise, is institutions. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. Therefore, a good portion of institutional money invested in the company is usually a huge vote of confidence on its future.
In the chart below, we zoom in on the different ownership groups of Lument Finance Trust.
Check out our latest analysis for Lument Finance Trust
What Does The Institutional Ownership Tell Us About Lument Finance Trust?
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 Lument Finance Trust does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Lument Finance Trust's historic earnings and revenue below, but keep in mind there's always more to the story.
Lument Finance Trust is not owned by hedge funds. Our data shows that Boston Partners Global Investors, Inc. is the largest shareholder with 27% of shares outstanding. Hunt Companies, Inc. is the second largest shareholder owning 11% of common stock, and AXA SA holds about 6.4% of the company stock. Additionally, the company's CEO James Flynn directly holds 0.6% of the total shares outstanding.
To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.
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.
Insider Ownership Of Lument Finance Trust
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
We can report that insiders do own shares in Lument Finance Trust, Inc.. In their own names, insiders own US$2.7m worth of stock in the US$106m company. Some would say this shows alignment of interests between shareholders and the board, though we generally prefer to see bigger insider holdings. But it might be worth checking if those insiders have been selling.
General Public Ownership
With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lument Finance Trust. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
It seems that Private Companies own 11%, of the Lument Finance Trust stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Public Company Ownership
Public companies currently own 6.4% of Lument Finance Trust stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Lument Finance Trust better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Lument Finance Trust (of which 1 can't be ignored!) you should know about.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
