MTR Corporation Limited's (HKG:66) top owners are state or government with 74% stake, while 20% is held by individual investors

Key Insights

• MTR's significant state or government ownership suggests that the key decisions are influenced by shareholders from the larger public
• 74% of the company is held by a single shareholder (Hong Kong)
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

We've discovered 2 warning signs about MTR. View them for free.

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 74% to be precise, is state or government. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

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?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that MTR does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see MTR's historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in MTR. Our data shows that Hong Kong is the largest shareholder with 74% 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 1.0% and 1.0% of the shares outstanding respectively, BlackRock, Inc. and The Vanguard Group, Inc. are the second and third largest shareholders.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of MTR

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own less than 1% of MTR Corporation Limited. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own HK$82m of stock. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with MTR (at least 1 which shouldn't be ignored) , and understanding them should be part of your investment process.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

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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.