Taichung Commercial Bank Co., Ltd.'s (TWSE:2812) stock price dropped 4.7% last week; individual investors would not be happy

Key Insights

• Significant control over Taichung Commercial Bank by individual investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 13 shareholders
• Institutional ownership in Taichung Commercial Bank is 12%

To get a sense of who is truly in control of Taichung Commercial Bank Co., Ltd. (TWSE:2812), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, individual investors endured the biggest losses as the stock fell by 4.7%.

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

See our latest analysis for Taichung Commercial Bank

What Does The Institutional Ownership Tell Us About Taichung Commercial Bank?

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.

We can see that Taichung Commercial Bank does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Taichung Commercial Bank's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Taichung Commercial Bank. Looking at our data, we can see that the largest shareholder is China Man-Made Fiber Corporation with 21% of shares outstanding. Pan Asia Chemical Co. is the second largest shareholder owning 5.5% of common stock, and Taichung Commercial Bank Co., Ltd., ESOP holds about 4.1% of the company stock.

After doing some more digging, we found that the top 13 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

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 Taichung Commercial Bank

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

Shareholders would probably be interested to learn that insiders own shares in Taichung Commercial Bank Co., Ltd.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around NT$3.4b worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 49% stake in Taichung Commercial Bank. 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

We can see that Private Companies own 5.2%, of the shares on issue. 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.

Public Company Ownership

We can see that public companies hold 27% of the Taichung Commercial Bank shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Taichung Commercial Bank you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.