Could the ownership structure of Hersha Hospitality Trust (NYSE:HT) tell us anything useful?


A look at the shareholders of Hersha Hospitality Trust (NYSE:HT) can tell us which group is more powerful. Big companies usually have institutions as shareholders, and we usually see insiders owning shares in small companies. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, “Don’t tell me what you think, tell me what you have in your wallet”.

Hersha Hospitality Trust is a small company with a market capitalization of US$427 million, so it may still fly under the radar of many institutional investors. Looking at our ownership group data (below), it appears that institutions are visible on the share register. We can zoom in on the different ownership groups, to learn more about Hersha Hospitality Trust.

NYSE: HT Ownership Breakdown February 12, 2022

What does institutional ownership tell us about Hersha Hospitality Trust?

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.

As you can see, institutional investors own a sizeable portion of Hersha Hospitality Trust. This suggests some credibility with professional investors. But we cannot rely solely on this fact since institutions sometimes make bad investments, like everyone else. When multiple institutions hold a stock, there is always a risk that they are in a “crowded trade”. When such a transaction goes wrong, multiple parties may compete to quickly sell shares. This risk is higher in a company with no history of growth. You can see Hersha Hospitality Trust’s historical revenue and earnings below, but keep in mind there’s always more to tell.

NYSE: HT Earnings and Revenue Growth February 12, 2022

Since institutional investors own more than half of the issued shares, the board will likely have to pay attention to their preferences. Hedge funds don’t have a lot of shares in Hersha Hospitality Trust. The company’s largest shareholder is BlackRock, Inc., with a 14% stake. Meanwhile, the second and third largest shareholders hold 6.8% and 5.3% of the outstanding shares respectively. Jay Shah, who is the third shareholder, also holds the title of member of the board of directors.

A closer look at our ownership figures suggests that the top 14 shareholders hold a combined ownership of 51%, implying that no single shareholder has a majority.

While it makes sense to study data on a company’s institutional ownership, it also makes sense to study analyst sentiment to find out which way the wind is blowing. A number of analysts cover the stock, so you can look at growth forecasts quite easily.

Insider owned by Hersha Hospitality Trust

The definition of an insider may differ slightly from country to country, but board members still matter. The management of the company runs the company, but the CEO will answer to the board of directors, even if he is a member of it.

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.

Our information suggests that insiders hold a significant stake in Hersha Hospitality Trust. Insiders hold a $61 million stake in this $427 million company. It’s great to see insiders so invested in the company. it might be worth checking out whether these insiders have purchased recently.

General public property

The general public, including retail investors, owns 23% of the company’s capital and therefore cannot be easily ignored. Although this group may not necessarily make the decisions, they can certainly have a real influence on the way the business is run.

Next steps:

It is always useful to think about the different groups that own shares in a company. But to better understand Hersha Hospitality Trust, we need to consider many other factors. For example, we have identified 2 warning signs for Hersha Hospitality Trust of which you should be aware.

Ultimately the future is the most important. You can access this free analyst forecast report for the company.

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.

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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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