Painful week for retail investors invested in Nan Ya Plastics Corporation (TWSE:1303) after 3.3% drop, institutions also suffered losses

Key Insights

• Significant control over Nan Ya Plastics by retail investors implies that the general public has more power to influence management and governance-related decisions
• A total of 16 investors have a majority stake in the company with 50% ownership
• Institutions own 19% of Nan Ya Plastics

To get a sense of who is truly in control of Nan Ya Plastics Corporation (TWSE:1303), it is important to understand the ownership structure of the business. With 45% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 19% came under pressure after market cap dropped to NT$445b last week,retail investors took the most losses.

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

See our latest analysis for Nan Ya Plastics

What Does The Institutional Ownership Tell Us About Nan Ya Plastics?

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.

Nan Ya Plastics already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Nan Ya Plastics' historic earnings and revenue below, but keep in mind there's always more to the story.

Nan Ya Plastics is not owned by hedge funds. Chang Gung Medical Foundation is currently the company's largest shareholder with 11% of shares outstanding. In comparison, the second and third largest shareholders hold about 9.9% and 5.2% of the stock.

A closer look at our ownership figures suggests that the top 16 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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

Insider Ownership Of Nan Ya Plastics

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.

Shareholders would probably be interested to learn that insiders own shares in Nan Ya Plastics Corporation. It is a very large company, and board members collectively own NT$9.4b worth of shares (at current prices). we sometimes take an interest in whether they have been buying or selling.

General Public Ownership

With a 45% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Nan Ya 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 Nan Ya Plastics stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 17% of the Nan Ya Plastics shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 2 warning signs for Nan Ya Plastics you should be aware of, and 1 of them makes us a bit uncomfortable.

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.

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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.