Retail investors who have a significant stake must be disappointed along with institutions after LARGAN Precision Co.,Ltd's (TWSE:3008) market cap dropped by NT$11b

Key Insights

• The considerable ownership by retail investors in LARGAN PrecisionLtd indicates that they collectively have a greater say in management and business strategy
• A total of 19 investors have a majority stake in the company with 50% ownership
• Insider ownership in LARGAN PrecisionLtd is 14%

A look at the shareholders of LARGAN Precision Co.,Ltd (TWSE:3008) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are retail investors with 44% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 3.6% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 26% stock also took a hit.

In the chart below, we zoom in on the different ownership groups of LARGAN PrecisionLtd.

Check out our latest analysis for LARGAN PrecisionLtd

What Does The Institutional Ownership Tell Us About LARGAN PrecisionLtd?

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.

As you can see, institutional investors have a fair amount of stake in LARGAN PrecisionLtd. 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 LARGAN PrecisionLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

LARGAN PrecisionLtd is not owned by hedge funds. Maoyu Memorial Co., Ltd. is currently the largest shareholder, with 14% of shares outstanding. For context, the second largest shareholder holds about 5.0% of the shares outstanding, followed by an ownership of 4.9% by the third-largest shareholder. Tsui-Ying Chiang, who is the third-largest shareholder, also happens to hold the title of Member of Corporate Board.

A closer look at our ownership figures suggests that the top 19 shareholders have a combined ownership of 50% implying that 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of LARGAN PrecisionLtd

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.

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 information suggests that insiders maintain a significant holding in LARGAN Precision Co.,Ltd. It is very interesting to see that insiders have a meaningful NT$44b stake in this NT$305b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 44% ownership, the general public, mostly comprising of individual investors, have some degree of sway over LARGAN PrecisionLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 14%, of the company's shares. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with LARGAN PrecisionLtd , and understanding them should be part of your investment process.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.