Public companies in SK Innovation Co., Ltd. (KRX:096770) are its biggest bettors, and their bets paid off as stock gained 5.5% last week

Key Insights

• SK Innovation's significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The largest shareholder of the company is SK Inc. with a 57% stake
• Institutional ownership in SK Innovation is 13%

To get a sense of who is truly in control of SK Innovation Co., Ltd. (KRX:096770), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 57% to be precise, is public companies. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies were the biggest beneficiaries of last week’s 5.5% gain.

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

View our latest analysis for SK Innovation

What Does The Institutional Ownership Tell Us About SK Innovation?

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.

As you can see, institutional investors have a fair amount of stake in SK Innovation. 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 SK Innovation'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 SK Innovation. SK Inc. is currently the largest shareholder, with 57% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. In comparison, the second and third largest shareholders hold about 5.2% and 1.5% of the stock.

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

Insider Ownership Of SK Innovation

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 SK Innovation Co., Ltd.. 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 ₩2.7b 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-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

Public companies currently own 57% of SK Innovation stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand SK Innovation better, we need to consider many other factors. For example, we've discovered 2 warning signs for SK Innovation that you should be aware of before investing here.

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.