Is Tonlin Department Store Co.,Ltd.'s (TPE:2910) Shareholder Ownership Skewed Towards Insiders?

If you want to know who really controls Tonlin Department Store Co.,Ltd. (TPE:2910), then you'll have to look at the makeup of its share registry. 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.

Tonlin Department StoreLtd is not a large company by global standards. It has a market capitalization of NT$7.6b, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. We can zoom in on the different ownership groups, to learn more about Tonlin Department StoreLtd.

Check out our latest analysis for Tonlin Department StoreLtd

What Does The Lack Of Institutional Ownership Tell Us About Tonlin Department StoreLtd?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Tonlin Department StoreLtd might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Tonlin Department StoreLtd is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is Shunxiang Development Co., Ltd. with 20% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 13%, of the shares outstanding, respectively. Furthermore, CEO Hua Li Weng is the owner of 3.0% of the company's shares.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Tonlin Department StoreLtd

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.

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 information suggests that insiders maintain a significant holding in Tonlin Department Store Co.,Ltd.. It has a market capitalization of just NT$7.6b, and insiders have NT$2.3b worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 28% ownership, the general public have some degree of sway over Tonlin Department StoreLtd. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

Our data indicates that Private Companies hold 42%, of the company's shares. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Tonlin Department StoreLtd better, we need to consider many other factors. For example, we've discovered 2 warning signs for Tonlin Department StoreLtd (1 is potentially serious!) that you should be aware of before investing here.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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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