Do Insiders Own Lots Of Shares In Thomson Medical Group Limited (SGX:A50)?

Every investor in Thomson Medical Group Limited (SGX:A50) should be aware of the most powerful shareholder groups. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.

Thomson Medical Group has a market capitalization of S$1.5b, so we would expect some institutional investors to have noticed the stock. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have not yet purchased much of the company. We can zoom in on the different ownership groups, to learn more about Thomson Medical Group.

See our latest analysis for Thomson Medical Group

SGX:A50 Ownership Summary May 18th 2020
SGX:A50 Ownership Summary May 18th 2020

What Does The Lack Of Institutional Ownership Tell Us About Thomson Medical Group?

We don’t tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it’s not particularly common.

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don’t attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it’s always possible that professional investors are avoiding a company because they don’t think it’s the best place for their money. Thomson Medical Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

SGX:A50 Income Statement May 18th 2020
SGX:A50 Income Statement May 18th 2020

Hedge funds don’t have many shares in Thomson Medical Group. Looking at our data, we can see that the largest shareholder is Eng Lim with 88% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. The second largest shareholder with 0.6%, is The Vanguard Group, Inc., followed by Huen Poh Lai, with an ownership of 0.6%.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Thomson Medical Group

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

Our most recent data indicates that insiders own the majority of Thomson Medical Group Limited. This means they can collectively make decisions for the company. Insiders own S$1.3b worth of shares in the S$1.5b company. That’s extraordinary! Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 10% ownership, the general public have some degree of sway over A50. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Thomson Medical Group better, we need to consider many other factors. For instance, we’ve identified 4 warning signs for Thomson Medical Group (2 make us uncomfortable) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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