Hyundai Rotem Company's (KRX:064350) market cap surged ₩213b last week, retail investors who have a lot riding on the company were rewarded

Key Insights

• Hyundai Rotem's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 5 investors have a majority stake in the company with 51% ownership
• 20% of Hyundai Rotem is held by Institutions

To get a sense of who is truly in control of Hyundai Rotem Company (KRX:064350), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, retail investors were the biggest beneficiaries of last week’s 5.4% gain.

Let's delve deeper into each type of owner of Hyundai Rotem, beginning with the chart below.

View our latest analysis for Hyundai Rotem

What Does The Institutional Ownership Tell Us About Hyundai Rotem?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Hyundai Rotem already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Hyundai Rotem'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 Hyundai Rotem. Our data shows that Hyundai Motor Company is the largest shareholder with 34% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.1% and 5.4% of the stock.

On looking further, we found that 51% of the shares are owned by the top 5 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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 Hyundai Rotem

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 data suggests that insiders own under 1% of Hyundai Rotem Company in their own names. Keep in mind that it's a big company, and the insiders own ₩159m worth of shares. The absolute value might be more important than the proportional share. It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.

General Public Ownership

With a 46% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hyundai Rotem. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 34% of Hyundai Rotem stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hyundai Rotem better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free.

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.