Sports Gear Co., Ltd. (TWSE:6768) President Wei-Chia Chen's holdings dropped 5.4% in value as a result of the recent pullback

Key Insights

• Sports Gear's significant insider ownership suggests inherent interests in company's expansion
• 58% of the company is held by a single shareholder (Wei-Chia Chen)
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Sports Gear Co., Ltd. (TWSE:6768) can tell us which group is most powerful. The group holding the most number of shares in the company, around 64% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to NT$29b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Sports Gear.

See our latest analysis for Sports Gear

What Does The Institutional Ownership Tell Us About Sports Gear?

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.

Sports Gear already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Sports Gear, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Sports Gear. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Sports Gear's case, its President, Wei-Chia Chen, is the largest shareholder, holding 58% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 5.9% and 4.7%, of the shares outstanding, respectively.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Sports Gear

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own the majority of Sports Gear Co., Ltd.. This means they can collectively make decisions for the company. So they have a NT$19b stake in this NT$29b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 25% stake in Sports Gear. 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

Our data indicates that Private Companies hold 3.6%, of the company's shares. 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. Take risks for example - Sports Gear has 2 warning signs we think you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.