In the wake of New York Mortgage Trust, Inc.'s (NASDAQ:NYMT) latest US$69m market cap drop, institutional owners may be forced to take severe actions
Key Insights
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Given the large stake in the stock by institutions, New York Mortgage Trust's stock price might be vulnerable to their trading decisions
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The top 25 shareholders own 48% of the company
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Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock
To get a sense of who is truly in control of New York Mortgage Trust, Inc. (NASDAQ:NYMT), it is important to understand the ownership structure of the business. We can see that institutions own the lion's share in the company with 54% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
And institutional investors endured the highest losses after the company's share price fell by 9.0% last week. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 28% for shareholders. 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 New York Mortgage Trust which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about New York Mortgage Trust.
View our latest analysis for New York Mortgage Trust
What Does The Institutional Ownership Tell Us About New York Mortgage 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 New York Mortgage Trust 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. 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 New York Mortgage Trust's historic earnings and revenue below, but keep in mind there's always more to the story.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Hedge funds don't have many shares in New York Mortgage Trust. BlackRock, Inc. is currently the company's largest shareholder with 17% of shares outstanding. For context, the second largest shareholder holds about 6.9% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder.