Pegatron Corporation's (TWSE:4938) market cap dropped NT$20b last week; individual investors who hold 41% were hit as were institutions

Key Insights

• Pegatron's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 15 investors have a majority stake in the company with 51% ownership
• Institutions own 31% of Pegatron

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Every investor in Pegatron Corporation (TWSE:4938) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 41% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While institutions who own 31% came under pressure after market cap dropped to NT$223b last week,individual investors took the most losses.

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

View our latest analysis for Pegatron

What Does The Institutional Ownership Tell Us About Pegatron?

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 Pegatron. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Pegatron's earnings history below. Of course, the future is what really matters.

Pegatron is not owned by hedge funds. ASUSTeK Computer Inc. is currently the largest shareholder, with 17% of shares outstanding. With 4.7% and 3.8% of the shares outstanding respectively, Fuh Hwa Securities Investment Trust Co., Ltd. and Zi-Xian Tong are the second and third largest shareholders.

A closer look at our ownership figures suggests that the top 15 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Pegatron

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can see that insiders own shares in Pegatron Corporation. This is a big company, so it is good to see this level of alignment. Insiders own NT$21b worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 41% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Pegatron. 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

It appears to us that public companies own 17% of Pegatron. 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:

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. Be aware that Pegatron is showing 2 warning signs in our investment analysis , you should know about...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.