Chang Wah Electromaterials Inc.'s (TWSE:8070) market cap surged NT$1.6b last week, public companies who have a lot riding on the company were rewarded

Key Insights

• Chang Wah Electromaterials' significant public companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 4 shareholders own 51% of the company
• Institutions own 16% of Chang Wah Electromaterials

If you want to know who really controls Chang Wah Electromaterials Inc. (TWSE:8070), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 36% to be precise, is public companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, public companies were the biggest beneficiaries of last week’s 6.2% gain.

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

View our latest analysis for Chang Wah Electromaterials

What Does The Institutional Ownership Tell Us About Chang Wah Electromaterials?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that Chang Wah Electromaterials does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Chang Wah Electromaterials, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in Chang Wah Electromaterials. Wah Lee Industrial Corporation is currently the company's largest shareholder with 30% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 8.6% and 6.7%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Chang Wah Electromaterials

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.

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 most recent data indicates that insiders own less than 1% of Chang Wah Electromaterials Inc.. However, it's possible that insiders might have an indirect interest through a more complex structure. It appears that the board holds about NT$112m worth of stock. This compares to a market capitalization of NT$28b. We 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-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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.

Private Company Ownership

We can see that Private Companies own 18%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

Public companies currently own 36% of Chang Wah Electromaterials 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Chang Wah Electromaterials better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Chang Wah Electromaterials , and understanding them should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.