Could The Elitegroup Computer Systems Co.,Ltd. (TPE:2331) Ownership Structure Tell Us Something Useful?

A look at the shareholders of Elitegroup Computer Systems Co.,Ltd. (TPE:2331) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies. Companies that used to be publicly owned tend to have lower insider ownership.

Elitegroup Computer SystemsLtd is a smaller company with a market capitalization of NT$13b, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutional investors have bought into the company. Let's take a closer look to see what the different types of shareholders can tell us about Elitegroup Computer SystemsLtd.

See our latest analysis for Elitegroup Computer SystemsLtd

What Does The Institutional Ownership Tell Us About Elitegroup Computer SystemsLtd?

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.

We can see that Elitegroup Computer SystemsLtd does have institutional investors; and they hold a good portion of the company's stock. 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 Elitegroup Computer SystemsLtd's earnings history below. Of course, the future is what really matters.

Elitegroup Computer SystemsLtd is not owned by hedge funds. The company's largest shareholder is Tatung Co., Ltd., with ownership of 27%. With 13% and 1.8% of the shares outstanding respectively, Pou Chen Corporation and Norges Bank Investment Management are the second and third largest shareholders.

A deeper look at our ownership data shows that the top 13 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Elitegroup Computer SystemsLtd

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 data suggests that insiders own under 1% of Elitegroup Computer Systems Co.,Ltd. in their own names. It seems the board members have no more than NT$455k worth of shares in the NT$13b company. I generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public, mostly retail investors, hold a substantial 55% stake in Elitegroup Computer SystemsLtd, suggesting it is a fairly popular stock. With this size 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 decline an acquisition or merger that may not improve profitability.

Public Company Ownership

It appears to us that public companies own 40% of Elitegroup Computer SystemsLtd. 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 Elitegroup Computer SystemsLtd better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Elitegroup Computer SystemsLtd (including 1 which shouldn't be ignored) .

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. 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.
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