retail investors who own 48% along with institutions invested in Formosa Plastics Corporation (TWSE:1301) saw increase in their holdings value last week

Key Insights

• Significant control over Formosa Plastics by retail investors implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 24 shareholders
• Institutions own 18% of Formosa Plastics

Every investor in Formosa Plastics Corporation (TWSE:1301) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 48% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 5.8% increase in the stock price last week, retail investors profited the most, but institutions who own 18% stock also stood to gain from the increase.

In the chart below, we zoom in on the different ownership groups of Formosa Plastics.

Check out our latest analysis for Formosa Plastics

What Does The Institutional Ownership Tell Us About Formosa Plastics?

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.

Formosa Plastics already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Formosa Plastics, (below). Of course, keep in mind that there are other factors to consider, too.

Formosa Plastics is not owned by hedge funds. Our data shows that Chang Gung Medical Foundation is the largest shareholder with 9.4% of shares outstanding. Formosa Chemicals & Fibre Corporation is the second largest shareholder owning 7.6% of common stock, and Credit Suisse, Investment Banking and Securities Investments holds about 6.3% of the company stock.

A closer look at our ownership figures suggests that the top 24 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Formosa Plastics

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Our most recent data indicates that insiders own some shares in Formosa Plastics Corporation. The insiders have a meaningful stake worth NT$8.4b. Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 48% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Formosa Plastics. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Company Ownership

It seems that Private Companies own 17%, of the Formosa Plastics 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.

Public Company Ownership

It appears to us that public companies own 14% of Formosa Plastics. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Formosa Plastics better, we need to consider many other factors. Take risks for example - Formosa Plastics has 1 warning sign we think you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.