Realogy’s institutional backers took a beating Friday, as they watched the value of their stock dwindle within a 24-hour period following yet-another disappointing earnings report.
As of market close Friday, Realogy’s stock price of $9.23 was down nearly 30 percent from the close of trading on May 1, one day before Realogy released its results for 2019’s first quarter. The stock was down a whopping 63 percent year over year, and Realogy’s market cap came dangerously close to dipping below $1 billion, but ended the day just above that mark.
Investment manager the Vanguard Group is Realogy’s largest institutional investor, with a 15.2 percent ownership stake, according to Realogy’s most recent proxy statement, dated March 20, 2019. The value of Vanguard’s shares was $160 million on Friday afternoon, reflecting a loss of $67.2 million since May 1.
Besides Vanguard, EdgePoint Investment Group owns a 14.1 percent stake, according to the proxy document, with 16.1 million shares valued at $148.7 million on Friday. That’s down from $211.2 million Wednesday. BlackRock holds a 9.7 percent stake and T. Rowe Price Associates owns 9.2 percent.
Realogy’s executives also have skin in the game. In 2019, the company changed certain compensation requirements so that the company’s chief executive now has to own five to six times their base salary in stock. The ownership requirement for directors was also increased to $500,000 from $375,000.
According to filings with the U.S. Securities and Exchange Commission, CEO Ryan Schneider owns 233,461 shares and General Council Marilyn Wasser owns 142,418 shares. Former CFO Tony Hull owns 171,633.
Realogy’s stock has been in a downward spiral for more than a year, amid a U.S. housing market slowdown that’s coincided with aggressive competition among brokerage firms.
Analyst John Campbell of Stephens told clients in a research note on Thursday that Realogy’s sharp decline was “highly surprising,” since there wasn’t anything “overly negative” in the earnings report.
“Some are questioning the degree of year over year transaction volume versus the national market,” he wrote, “we believe that the majority of this was geographic and high end exposure.”
Realogy reported a 9 percent year-over-year drop in sales volume for the first quarter — a statistic that was significantly worse than the 4 percent national average that was reported by the National Association of Realtors.
Realogy declined to comment on the stock’s performance Friday, but in a statement a spokesperson for the conglomerate said, “It is worth noting that stock price and the health of the company are different.”
In 2018, Realogy generated $325 million in free cash flow that can be used to invest in the business.