Stock Analysis

Is Standard Chem & Pharm CO., LTD. (TPE:1720) Popular Amongst Insiders?

TWSE:1720
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A look at the shareholders of Standard Chem & Pharm CO., LTD. (TPE:1720) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Standard Chem & Pharm is a smaller company with a market capitalization of NT$6.7b, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are not really that prevalent on the share registry. Let's delve deeper into each type of owner, to discover more about Standard Chem & Pharm.

See our latest analysis for Standard Chem & Pharm

ownership-breakdown
TSEC:1720 Ownership Breakdown December 22nd 2020

What Does The Institutional Ownership Tell Us About Standard Chem & Pharm?

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.

Since institutions own only a small portion of Standard Chem & Pharm, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

earnings-and-revenue-growth
TSEC:1720 Earnings and Revenue Growth December 22nd 2020

We note that hedge funds don't have a meaningful investment in Standard Chem & Pharm. Our data shows that Jin Cai Fan is the largest shareholder with 31% of shares outstanding. Tzu-Ting Fan is the second largest shareholder owning 6.6% of common stock, and Cui Ye holds about 5.1% of the company stock. Tzu-Ting Fan, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

Our studies suggest that the top 14 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 Standard Chem & Pharm

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. 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 most recent data indicates that insiders own a reasonable proportion of Standard Chem & Pharm CO., LTD.. Insiders own NT$2.8b worth of shares in the NT$6.7b company. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 53% of Standard Chem & Pharm shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

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 1 warning sign for Standard Chem & Pharm 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.

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