Every investor in New Jersey Resources Corporation (NYSE:NJR) should be aware of the most powerful shareholder groups.
Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies.
We also tend to see lower insider ownership in companies that were previously publicly owned.
With a market capitalization of US$4.0b, New Jersey Resources is rather large. We’d expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too.
Our analysis of the ownership of the company, below, shows that
institutional investors have bought into the company.
We can zoom in on the different ownership groups, to learn more about NJR.
What Does The Institutional Ownership Tell Us About New Jersey Resources?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that New Jersey Resources does have institutional investors; and they hold 67% of the 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 New Jersey Resources’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences.
New Jersey Resources is not owned by hedge funds.
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 New Jersey Resources
The definition of an insider can differ slightly between different countries, but members of the board of directors always count.
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.
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.
I can report that insiders do own shares in New Jersey Resources Corporation.
This is a big company, so it is good to see this level of alignment. Insiders own US$51m worth of shares (at current prices).
It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, with a 32% stake in the company, will not easily be ignored.
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.
I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.
I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at [email protected].
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