While institutions invested in Fositek Corp. (TWSE:6805) benefited from last week's 9.9% gain, individual investors stood to gain the most

Key Insights

• The considerable ownership by individual investors in Fositek indicates that they collectively have a greater say in management and business strategy
• A total of 25 investors have a majority stake in the company with 46% ownership
• Institutional ownership in Fositek is 22%

To get a sense of who is truly in control of Fositek Corp. (TWSE:6805), it is important to understand the ownership structure of the business. We can see that individual investors own the lion's share in the company with 52% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 9.9% increase in the stock price last week, individual investors profited the most, but institutions who own 22% stock also stood to gain from the increase.

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

View our latest analysis for Fositek

What Does The Institutional Ownership Tell Us About Fositek?

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 Fositek 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. 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 Fositek's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Fositek. Asia Vital Components Co., Ltd. is currently the company's largest shareholder with 17% of shares outstanding. With 4.0% and 3.8% of the shares outstanding respectively, Uni-President Assets Management Corp. and Fuh Hwa Securities Investment Trust Co., Ltd. are the second and third largest shareholders.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 Fositek

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

We can report that insiders do own shares in Fositek Corp.. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around NT$1.8b 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

The general public, mostly comprising of individual investors, collectively holds 52% of Fositek shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 4.9%, 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.

Public Company Ownership

Public companies currently own 17% of Fositek stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Fositek you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.