Merida Industry Co., Ltd. (TWSE:9914) surges 4.7%; individual investors who own 42% shares profited along with institutions

Key Insights

• The considerable ownership by individual investors in Merida Industry indicates that they collectively have a greater say in management and business strategy
• The top 16 shareholders own 50% of the company
• 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 individual investors own the lion's share in the company with 42% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

While individual investors were the group that benefitted the most from last week’s NT$2.2b market cap gain, institutions too had a 29% share in those profits.

Let's delve deeper into each type of owner of Merida Industry, beginning with the chart below.

See our latest analysis for Merida Industry

What Does The Institutional Ownership Tell Us About Merida Industry?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Merida Industry 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 Merida Industry's historic earnings and revenue below, but keep in mind there's always more to the story.

Merida Industry is not owned by hedge funds. The company's largest shareholder is Song-Zhu Zeng, with ownership of 16%. In comparison, the second and third largest shareholders hold about 6.0% and 4.8% of the stock.

After doing some more digging, we found that the top 16 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. 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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems insiders own a significant proportion of Merida Industry Co., Ltd.. It has a market capitalization of just NT$49b, and insiders have NT$13b 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

With a 42% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Merida Industry. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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 - Merida Industry has 1 warning sign we think you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.