Private companies invested in Silla Co.,Ltd (KRX:004970) copped the brunt of last week's ₩22b market cap decline

Key Insights

• Significant control over SillaLtd by private companies implies that the general public has more power to influence management and governance-related decisions
• 51% of the business is held by the top 2 shareholders
• Insiders own 18% of SillaLtd

To get a sense of who is truly in control of Silla Co.,Ltd (KRX:004970), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are private companies with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

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

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

Check out our latest analysis for SillaLtd

What Does The Institutional Ownership Tell Us About SillaLtd?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

As you can see, institutional investors have a fair amount of stake in SillaLtd. 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. 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 SillaLtd, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in SillaLtd. The company's largest shareholder is Silla Holdings Co. Ltd, with ownership of 41%. Jae-Heung Park is the second largest shareholder owning 10% of common stock, and Silla Cultural Scholarship Foundation, Endowment Arm holds about 7.8% of the company stock.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 SillaLtd

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.

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.

It seems insiders own a significant proportion of Silla Co.,Ltd. Insiders own ₩32b worth of shares in the ₩174b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 32% ownership, the general public, mostly comprising of individual investors, have some degree of sway over SillaLtd. 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.

Private Company Ownership

It seems that Private Companies own 41%, of the SillaLtd stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for SillaLtd (of which 1 makes us a bit uncomfortable!) you should know about.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com