Primax Electronics Ltd.'s (TWSE:4915) market cap dropped NT$1.8b last week; individual investors who hold 50% were hit as were institutions

Key Insights

• The considerable ownership by retail investors in Primax Electronics indicates that they collectively have a greater say in management and business strategy
• 45% of the business is held by the top 25 shareholders
• Institutions own 44% of Primax Electronics

Every investor in Primax Electronics Ltd. (TWSE:4915) should be aware of the most powerful shareholder groups. With 50% stake, retail investors possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While institutions who own 44% came under pressure after market cap dropped to NT$43b last week,retail investors took the most losses.

Let's delve deeper into each type of owner of Primax Electronics, beginning with the chart below.

Check out our latest analysis for Primax Electronics

What Does The Institutional Ownership Tell Us About Primax Electronics?

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.

As you can see, institutional investors have a fair amount of stake in Primax Electronics. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Primax Electronics, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Primax Electronics. Capital Investment Trust Corporation is currently the largest shareholder, with 7.0% of shares outstanding. With 5.1% and 2.7% of the shares outstanding respectively, Fuh Hwa Securities Investment Trust Co., Ltd. and The Vanguard Group, Inc. are the second and third largest shareholders. In addition, we found that Yung-Chung Pan, the CEO has 1.3% of the shares allocated to their name.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Primax Electronics

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Primax Electronics Ltd.. The insiders have a meaningful stake worth NT$1.8b. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public -- including retail investors -- own 50% of Primax Electronics. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Take risks for example - Primax Electronics has 1 warning sign we think you should be aware of.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com