Could TA Corporation Ltd's (SGX:PA3) Investor Composition Influence The Stock Price?

By
Simply Wall St
Published
June 17, 2020

The big shareholder groups in TA Corporation Ltd (SGX:PA3) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

TA is not a large company by global standards. It has a market capitalization of S$78m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about TA.

Check out our latest analysis for TA

SGX:PA3 Ownership Summary June 18th 2020

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

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

There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. TA's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

SGX:PA3 Income Statement June 18th 2020

We note that hedge funds don't have a meaningful investment in TA. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In TA's case, its Top Key Executive, Kiam Teck Liong, is the largest shareholder, holding 34% of shares outstanding. The second largest shareholder with 17%, is Tiam Boon Neo, followed by Tiam Neo, with an ownership of 16%. Note that they are also Chief Executive Officer and Alternate Director, respectively, once again pointing to significant ownership by company insiders.

Our analysis suggests that the top 2 shareholders collectively control 51% of the company's shares, implying that they have considerable power to influence the company's decisions.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of TA

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.

Our information suggests that insiders own more than half of TA Corporation Ltd. This gives them effective control of the company. That means they own S$66m worth of shares in the S$78m company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, with a 14% stake in the company, will not 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 3 warning signs we've spotted with TA (including 2 which is are significant) .

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. 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. Thank you for reading.

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