State or government are MTR Corporation Limited's (HKG:66) biggest owners and were hit after market cap dropped HK$5.6b

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)
• Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

Every investor in MTR Corporation Limited (HKG:66) should be aware of the most powerful shareholder groups. With 74% stake, state or government possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, state or government endured the biggest losses as the stock fell by 3.0%.

In the chart below, we zoom in on the different ownership groups of MTR.

View 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.

MTR already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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. The company's largest shareholder is Hong Kong, with ownership of 74%. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 1.0% of the shares outstanding, followed by an ownership of 0.9% by the third-largest shareholder.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of MTR

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

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. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own HK$80m worth of shares (at current prices). In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

With a 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over 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. Be aware that MTR is showing 1 warning sign in our investment analysis , you should know about...

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.

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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.