Should You Be Concerned About Chongherr Investments Ltd’s (ASX:CDH) Shareholders?

In this article, I will take a quick look at Chongherr Investments Ltd’s (ASX:CDH) recent ownership structure – an unconventional investing subject, but an important one. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. The same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, which is a decisive factor for a long-term investor. It also impacts the trading environment of company shares, which is more of a concern for short-term investors. Therefore, it is beneficial for us to examine CDH’s ownership structure in more detail.

Check out our latest analysis for Chongherr Investments
ASX:CDH Ownership_summary Jun 1st 18
ASX:CDH Ownership_summary Jun 1st 18

Insider Ownership

I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. 37.52% ownership of CDH insiders is large enough to make an impact on shareholder returns. In general, this level of insider ownership has negatively affected underperforming (consistently low PE ratio) companies and positively affected the companies that outperform (consistently high PE ratio). It’s also interesting to learn what CDH insiders have been doing with their shareholdings lately. Insiders buying company shares can be a positive indicator of future performance, but a selling decision can simply be driven by personal financial needs.

General Public Ownership

The general public holds 3.74% stake in CDH, which represents a relatively small class of owners. This size of ownership, while considerably small for a public company, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Another group of owners that a potential investor in CDH should consider are private companies, with a stake of 58.74%. While they invest more often due to strategic interests, an investment can also be driven by capital gains through share price appreciation. An ownership of this size indicates a strong financial backing and has the potential to influence CDH’s business strategy. Thus, investors should dig deeper into CDH’s business relations with these companies and how it can affect shareholder returns in the long-term.

Next Steps:

A relatively significant holding of company insiders could mean high alignment with shareholders. But at the same time, investors should be aware of the level of influence executives could have on governance decisions. However, ownership structure should not be the only determining factor when you’re building an investment thesis for CDH. Rather, you should be looking at fundamental drivers such as the intrinsic valuation, which is a key driver of Chongherr Investments’s share price. I urge you to complete your research by taking a look at the following:

  1. Financial Health: Is CDH’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  2. Past Track Record: Has CDH been consistently performing well irrespective of the ups and downs in the market? Go into more detail in the past performance analysis and take a look at the free visual representations of CDH’s historicals for more clarity.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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.