Eternal Materials Co., Ltd.'s (TWSE:1717) market cap up NT$3.3b last week, benefiting both individual investors who own 59% as well as insiders

Key Insights

• Eternal Materials' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 25 shareholders own 41% of the company
• Insider ownership in Eternal Materials is 14%

Every investor in Eternal Materials Co., Ltd. (TWSE:1717) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While individual investors were the group that benefitted the most from last week’s NT$3.3b market cap gain, insiders too had a 14% share in those profits.

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

See our latest analysis for Eternal Materials

What Does The Institutional Ownership Tell Us About Eternal Materials?

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.

As you can see, institutional investors have a fair amount of stake in Eternal Materials. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Eternal Materials' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Eternal Materials. Kwang Yang Motor Co., Ltd. is currently the largest shareholder, with 10.0% of shares outstanding. For context, the second largest shareholder holds about 7.8% of the shares outstanding, followed by an ownership of 4.8% by the third-largest shareholder. Kuo-Lun Kao, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Eternal Materials

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

It seems insiders own a significant proportion of Eternal Materials Co., Ltd.. It has a market capitalization of just NT$39b, and insiders have NT$5.6b worth of shares in their own names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 59% of Eternal Materials shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

It seems that Private Companies own 13%, of the Eternal Materials 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Eternal Materials better, we need to consider many other factors. For instance, we've identified 3 warning signs for Eternal Materials (1 doesn't sit too well with us) that 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.