Retail investors invested in MEGAELECTRONICS Co., Ltd. (KOSDAQ:226590) up 40% last week, insiders too were rewarded

Key Insights

• MEGAELECTRONICS' significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 8 investors have a majority stake in the company with 43% ownership
• 32% of MEGAELECTRONICS is held by insiders

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To get a sense of who is truly in control of MEGAELECTRONICS Co., Ltd. (KOSDAQ:226590), it is important to understand the ownership structure of the business. With 57% stake, retail investors 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).

Following a 40% increase in the stock price last week, retail investors profited the most, but insiders who own 32% stock also stood to gain from the increase.

Let's take a closer look to see what the different types of shareholders can tell us about MEGAELECTRONICS.

See our latest analysis for MEGAELECTRONICS

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

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. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of MEGAELECTRONICS, for yourself, below.

MEGAELECTRONICS is not owned by hedge funds. Ho-Kyeong Cho is currently the largest shareholder, with 30% of shares outstanding. Green Resources Co.,Ltd. is the second largest shareholder owning 5.6% of common stock, and T&K Mega Private Equity Joint Venture Fund holds about 4.8% of the company stock.

On studying our ownership data, we found that 8 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of MEGAELECTRONICS

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.

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 a reasonable proportion of MEGAELECTRONICS Co., Ltd.. Insiders have a ₩52b stake in this ₩165b business. 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

The general public, who are usually individual investors, hold a substantial 57% stake in MEGAELECTRONICS, suggesting it is a fairly popular stock. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

Our data indicates that Private Companies hold 10%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand MEGAELECTRONICS better, we need to consider many other factors. Take risks for example - MEGAELECTRONICS has 2 warning signs we think you should be aware of.

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.