Hung Ching Development & Construction Co. Ltd's (TWSE:2527) stock price dropped 11% last week; individual investors would not be happy

Key Insights

• Hung Ching Development & Construction's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• 46% of the business is held by the top 20 shareholders
• 13% of Hung Ching Development & Construction is held by insiders

A look at the shareholders of Hung Ching Development & Construction Co. Ltd (TWSE:2527) can tell us which group is most powerful. With 54% stake, individual investors possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to NT$8.4b last week, individual investors would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Hung Ching Development & Construction, beginning with the chart below.

View our latest analysis for Hung Ching Development & Construction

What Does The Institutional Ownership Tell Us About Hung Ching Development & Construction?

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.

Since institutions own only a small portion of Hung Ching Development & Construction, 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.

Hedge funds don't have many shares in Hung Ching Development & Construction. ASE Technology Holding Co., Ltd. is currently the largest shareholder, with 26% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 13% and 3.3%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 20 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Hung Ching Development & Construction

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Hung Ching Development & Construction Co. Ltd. Insiders have a NT$1.1b stake in this NT$8.4b business. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 54% of Hung Ching Development & Construction. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.

Private Company Ownership

We can see that Private Companies own 4.2%, of the shares on issue. 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 26% of the Hung Ching Development & Construction shares on issue. 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 Hung Ching Development & Construction better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Hung Ching Development & Construction (at least 2 which are potentially serious) , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.