This is what the ownership structure of Hotel Property Investments (ASX:HPI) looks like

If you want to know who actually controls Hotel Property Investments (ASX:HPI), then you’ll need to look at the composition of its share register. Institutions often own shares in larger companies, and we expect to see insiders owning a noticeable percentage of smaller ones. We also tend to see a decline in insider participation in companies that were previously public.

Hotel Property Investments is a small company with a market capitalization of A$642 million, so it may still fly under the radar of many institutional investors. Our analysis of company ownership, below, shows that the institutions are visible on the share register. Let’s dig deeper into each type of owner, to learn more about hotel real estate investments.

Check out our latest analysis for hotel property investments

distribution of property

What does institutional ownership tell us about hotel real estate investments?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. They therefore generally consider buying larger companies that are included in the relevant benchmark.

Hotel Property Investments already has institutions registered in the share register. Indeed, they hold a respectable stake in the company. This implies that analysts working for these institutions have reviewed the stock and like it. But like everyone else, they can be wrong. If multiple institutions change their minds on a stock at the same time, you could see the stock price drop quickly. It is therefore worth checking out the earnings history of Hotel Property Investments below. Of course, the future is what really matters.

earnings-and-revenue-growth

earnings-and-revenue-growth

Institutional investors own more than 50% of the company, so together they can probably heavily influence board decisions. Hedge funds don’t have a lot of shares in hotel real estate investments. Alceon Group Pty Limited, Asset Management Arm is currently the largest shareholder, with 11% of the outstanding shares. With 8.5% and 7.9% of the shares outstanding, respectively, The Vanguard Group, Inc. and Alceon Group No.75 Pty Ltd are the second and third largest shareholders.

Upon further inspection, we found that more than half of the company’s shares are held by the top 8 shareholders, suggesting that the interests of the larger shareholders are to some extent balanced by those of the smaller ones.

Institutional ownership research is a good way to assess and filter the expected performance of a stock. The same can be obtained by studying the feelings of the analyst. There are a reasonable number of analysts covering the stock, so it might be useful to know their overall view on the future.

Insider Ownership of Hotel Real Estate Investments

The definition of company insiders can be subjective and varies from jurisdiction to jurisdiction. Our data reflects individual insiders, capturing at least board members. The management of the company answers to the board of directors and the latter must represent the interests of the shareholders. In particular, sometimes the senior executives themselves sit on the board of directors.

Most view insider ownership as a positive because it can indicate that the board is well aligned with other shareholders. However, there are times when too much power is concentrated within this group.

Shareholders would likely be interested to learn that insiders hold shares in Hotel Property Investments. As individuals, insiders collectively hold A$8.0 million worth of the A$642 million company. Some would say this shows the alignment of interests between shareholders and the board. But it might be worth checking to see if these insiders have sold.

General public property

The general public, including retail investors, owns 30% of the company’s shares and therefore cannot be easily ignored. This size of ownership, although considerable, may not be sufficient to change company policy if the decision is not in line with other large shareholders.

Private Company Ownership

Our data indicates that private companies hold 7.9% of the company’s shares. It might be worth exploring this further. If related parties, such as insiders, have an interest in any of these private companies, this should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand hotel real estate investments, we need to consider many other factors. Take for example the ubiquitous specter of investment risk. We have identified 5 warning signs with Hotel Property Investments (at least 2 that make us uncomfortable), and understanding them should be part of your investment process.

If you’re like me, you might want to ask yourself if this business will grow or shrink. Luckily, you can check out this free report showing analyst predictions for its future.

NB: The figures in this article are calculated using trailing twelve month data, which refers to the 12 month period ending on the last day of the month in which the financial statements are dated. This may not be consistent with the annual report figures for the full year.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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