I
nstitutions' significant holdings in NexPoint Real Estate Finance give them considerable sway over the company's stock price. The top 2 shareholders control a substantial 56% of the business. Recent insider purchases suggest confidence in the company's prospects.

    A closer look at NexPoint Real Estate Finance's (NYSE:NREF) shareholder base reveals that hedge funds hold a commanding 44% stake, positioning them to benefit significantly from any stock price increases or losses. Given their vast resources and research capabilities, individual investors often view institutional ownership as a positive trait.

    Breaking down the ownership structure of NexPoint Real Estate Finance, we see that Highland Capital Management, L.P. is the largest shareholder with a 44% stake, followed by other significant shareholders holding around 12% and 4.5%. The company's CEO, James Dondero, also holds a notable 4.4% of total shares outstanding.

    Institutional investors often focus on companies included in major indices, so their substantial presence in NexPoint Real Estate Finance implies that analysts have given the stock a thumbs-up. However, this also increases the risk of a 'crowded trade,' where multiple parties may rush to sell if the stock declines.