Individual investors in Khgears International Limited (TWSE:4571) are its biggest bettors, and their bets paid off as stock gained 12% last week

Key Insights

• The considerable ownership by individual investors in Khgears International indicates that they collectively have a greater say in management and business strategy
• The top 8 shareholders own 51% of the company
• Insider ownership in Khgears International is 17%

A look at the shareholders of Khgears International Limited (TWSE:4571) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual investors with 49% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, individual investors were the biggest beneficiaries of last week’s 12% gain.

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

View our latest analysis for Khgears International

What Does The Lack Of Institutional Ownership Tell Us About Khgears International?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Khgears International'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.

Khgears International is not owned by hedge funds. Kwok Hing Global Limited is currently the largest shareholder, with 13% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.8% and 7.1%, of the shares outstanding, respectively. Chin-Jung Wu, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive. In addition, we found that Chun Hui Tu, the CEO has 3.6% of the shares allocated to their name.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Khgears International

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 most recent data indicates that insiders own a reasonable proportion of Khgears International Limited. Insiders have a NT$1.5b stake in this NT$8.6b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 49% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Khgears International. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 33%, 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Khgears International (1 can't be ignored) that you should be aware of.

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.