While private companies own 37% of Cathay Financial Holding Co., Ltd. (TWSE:2882), retail investors are its largest shareholders with 38% ownership

Key Insights

• Significant control over Cathay Financial Holding by retail investors implies that the general public has more power to influence management and governance-related decisions
• The top 12 shareholders own 51% of the company
• 24% of Cathay Financial Holding is held by Institutions

To get a sense of who is truly in control of Cathay Financial Holding Co., Ltd. (TWSE:2882), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 38% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Meanwhile, private companies make up 37% of the company’s shareholders.

Let's delve deeper into each type of owner of Cathay Financial Holding, beginning with the chart below.

Check out our latest analysis for Cathay Financial Holding

What Does The Institutional Ownership Tell Us About Cathay Financial Holding?

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 Cathay Financial Holding does have institutional investors; and they hold a good portion of the company's stock. 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 Cathay Financial Holding, (below). Of course, keep in mind that there are other factors to consider, too.

Cathay Financial Holding is not owned by hedge funds. The company's largest shareholder is Wan Bao Development Co., Ltd., with ownership of 17%. Meanwhile, the second and third largest shareholders, hold 15% and 3.0%, of the shares outstanding, respectively.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. 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 Cathay Financial Holding

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.

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.

Our information suggests that Cathay Financial Holding Co., Ltd. insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own NT$6.4b worth of shares. In this sort of situation, it can be more interesting to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Cathay Financial Holding. 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

It seems that Private Companies own 37%, of the Cathay Financial Holding stock. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Cathay Financial Holding better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Cathay Financial Holding .

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.