Chunghwa Telecom Co., Ltd.'s (TWSE:2412) top owners are state or government with 43% stake, while 26% is held by individual investors

Key Insights

• The considerable ownership by state or government in Chunghwa Telecom indicates that they collectively have a greater say in management and business strategy
• 52% of the business is held by the top 4 shareholders
• Institutions own 25% of Chunghwa Telecom

If you want to know who really controls Chunghwa Telecom Co., Ltd. (TWSE:2412), 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 43% to be precise, is state or government. Put another way, the group faces the maximum upside potential (or downside risk).

Individual investors, on the other hand, account for 26% of the company's stockholders.

In the chart below, we zoom in on the different ownership groups of Chunghwa Telecom.

Check out our latest analysis for Chunghwa Telecom

What Does The Institutional Ownership Tell Us About Chunghwa Telecom?

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.

Chunghwa Telecom already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Chunghwa Telecom'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 Chunghwa Telecom. Looking at our data, we can see that the largest shareholder is Ministry of Transportation and Communications R.O.C. with 35% of shares outstanding. Taiwan is the second largest shareholder owning 7.5% of common stock, and Shin Kong Investment Trust Co., Ltd. holds about 4.9% of the company stock.

Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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 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 Chunghwa Telecom

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

Our data suggests that insiders own under 1% of Chunghwa Telecom Co., Ltd. in their own names. But they may have an indirect interest through a corporate structure that we haven't picked up on. It is a very large company, so it would be surprising to see insiders own a large proportion of the company. Though their holding amounts to less than 1%, we can see that board members collectively own NT$199m worth of shares (at current prices). Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Chunghwa Telecom. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Chunghwa Telecom better, we need to consider many other factors. For example, we've discovered 1 warning sign for Chunghwa Telecom that you should be aware of before investing here.

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.