Institutional investors may overlook Fortress Real Estate Investments Limited's (JSE:FFB) recent R1.0b market cap drop as long-term gains remain positive

Key Insights

• Given the large stake in the stock by institutions, Fortress Real Estate Investments' stock price might be vulnerable to their trading decisions
• A total of 6 investors have a majority stake in the company with 54% ownership
• Recent purchases by insiders

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Every investor in Fortress Real Estate Investments Limited (JSE:FFB) should be aware of the most powerful shareholder groups. We can see that institutions own the lion's share in the company with 83% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Institutional investors was the group most impacted after the company's market cap fell to R28b last week. However, the 22% one-year return to shareholders might have softened the blow. They should, however, be mindful of further losses in the future.

Let's take a closer look to see what the different types of shareholders can tell us about Fortress Real Estate Investments.

View our latest analysis for Fortress Real Estate Investments

What Does The Institutional Ownership Tell Us About Fortress Real Estate Investments?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that Fortress Real Estate Investments does have institutional investors; and they hold a good portion of the company's stock. 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 fast. It's therefore worth looking at Fortress Real Estate Investments' earnings history below. Of course, the future is what really matters.

Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Hedge funds don't have many shares in Fortress Real Estate Investments. The company's largest shareholder is Public Investment Corporation Limited, with ownership of 22%. With 7.2% and 6.8% of the shares outstanding respectively, Truffle Asset Management and Sesfikile Capital (Pty) Ltd are the second and third largest shareholders.

We also observed that the top 6 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent.

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. 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 Fortress Real Estate Investments

The definition of an insider can 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own some shares in Fortress Real Estate Investments Limited. The insiders have a meaningful stake worth R295m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

The general public, who are usually individual investors, hold a 16% stake in Fortress Real Estate Investments. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Fortress Real Estate Investments better, we need to consider many other factors. Case in point: We've spotted 4 warning signs for Fortress Real Estate Investments you should be aware of, and 1 of them shouldn't be ignored.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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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.