Individual investors own 20% of MTR Corporation Limited (HKG:66) shares but state or government control 75% of the company

Key Insights

• The considerable ownership by state or government in MTR indicates that they collectively have a greater say in management and business strategy
• Hong Kong owns 75% of the company
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

Every investor in MTR Corporation Limited (HKG:66) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 75% to be precise, is state or government. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Meanwhile, individual investors make up 20% of the company’s shareholders.

Let's take a closer look to see what the different types of shareholders can tell us about MTR.

Check out our latest analysis for MTR

What Does The Institutional Ownership Tell Us About MTR?

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.

We can see that MTR does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of MTR, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in MTR. Our data shows that Hong Kong is the largest shareholder with 75% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 1.2% and 0.9% of the shares outstanding respectively, BlackRock, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of MTR

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 less than 1% of MTR Corporation Limited. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own HK$115m worth of shares. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in MTR. 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 MTR better, we need to consider many other factors. For instance, we've identified 2 warning signs for MTR that you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.