Recent 11% pullback would hurt NOVATECH Co., Ltd. (KOSDAQ:285490) insiders

Key Insights

• Insiders appear to have a vested interest in NOVATECH's growth, as seen by their sizeable ownership
• 58% of the company is held by a single shareholder (Choon-Teak Oh)
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

Every investor in NOVATECH Co., Ltd. (KOSDAQ:285490) should be aware of the most powerful shareholder groups. With 58% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 11% decline in share price, insiders suffered the most losses.

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

Check out our latest analysis for NOVATECH

What Does The Lack Of Institutional Ownership Tell Us About NOVATECH?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. NOVATECH might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in NOVATECH. Looking at our data, we can see that the largest shareholder is Choon-Teak Oh with 58% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 0.3% of the shares outstanding, followed by an ownership of 0.2% 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of NOVATECH

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. 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 the majority of NOVATECH Co., Ltd.. This means they can collectively make decisions for the company. Given it has a market cap of ₩172b, that means they have ₩100b worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 41% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NOVATECH. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand NOVATECH better, we need to consider many other factors. Take risks for example - NOVATECH has 1 warning sign we think you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.