Public companies are Greatek Electronics Inc.'s (TWSE:2441) biggest owners and were hit after market cap dropped NT$1.7b

Key Insights

• Significant control over Greatek Electronics by public companies implies that the general public has more power to influence management and governance-related decisions
• 50% of the business is held by the top 6 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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A look at the shareholders of Greatek Electronics Inc. (TWSE:2441) can tell us which group is most powerful. We can see that public companies own the lion's share in the company with 45% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 5.0% decline in share price, public companies suffered the most losses.

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

See our latest analysis for Greatek Electronics

What Does The Institutional Ownership Tell Us About Greatek Electronics?

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.

Greatek Electronics already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Greatek Electronics' historic earnings and revenue below, but keep in mind there's always more to the story.

Greatek Electronics is not owned by hedge funds. Powertech Technology Inc. is currently the company's largest shareholder with 43% of shares outstanding. For context, the second largest shareholder holds about 2.2% of the shares outstanding, followed by an ownership of 2.0% by the third-largest shareholder.

We did some more digging and found that 6 of the top shareholders account for roughly 50% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Greatek Electronics

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.

Our most recent data indicates that insiders own less than 1% of Greatek Electronics Inc.. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It has a market capitalization of just NT$33b, and the board has only NT$159m worth of shares in their own names. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 44% stake in the company, and hence can't easily be ignored. 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.

Public Company Ownership

Public companies currently own 45% of Greatek Electronics stock. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that Greatek Electronics is showing 2 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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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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.