Institutions along with retail investors who hold considerable shares inMerida Industry Co., Ltd. (TWSE:9914) come under pressure; lose 7.6% of holdings value

Key Insights

• Merida Industry's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 50% of the business is held by the top 14 shareholders
• 27% of Merida Industry is held by insiders

Every investor in Merida Industry Co., Ltd. (TWSE:9914) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion's share in the company with 42% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions, who own 29% shares weren’t spared from last week’s NT$5.4b market cap drop, retail investors as a group suffered the maximum losses

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

View our latest analysis for Merida Industry

What Does The Institutional Ownership Tell Us About Merida Industry?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Merida Industry 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. 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 Merida Industry'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 Merida Industry. Our data shows that Song-Zhu Zeng is the largest shareholder with 16% of shares outstanding. With 7.9% and 5.0% of the shares outstanding respectively, Cathay Life Insurance Co., Ltd., Asset Management Arm and Schroder Investment Management (Singapore) Ltd. are the second and third largest shareholders. In addition, we found that Vansen Tseng, the CEO has 2.7% of the shares allocated to their name.

After doing some more digging, we found that the top 14 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Merida Industry

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Merida Industry Co., Ltd.. It has a market capitalization of just NT$69b, and insiders have NT$19b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

The general public, who are usually individual investors, hold a 42% stake in Merida Industry. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Merida Industry better, we need to consider many other factors. For example, we've discovered 2 warning signs for Merida Industry (1 is potentially serious!) that you should be aware of before investing here.

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.