In the wake of Hansol Chemical Co., Ltd.'s (KRX:014680) latest ₩96b market cap drop, institutional owners may be forced to take severe actions

Simply Wall St · 10/14 22:16

Key Insights

  • Institutions' substantial holdings in Hansol Chemical implies that they have significant influence over the company's share price
  • 50% of the business is held by the top 8 shareholders
  • Insiders own 15% of Hansol Chemical

If you want to know who really controls Hansol Chemical Co., Ltd. (KRX:014680), then you'll have to look at the makeup of its share registry. We can see that institutions own the lion's share in the company with 50% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And so it follows that institutional investors was the group most impacted after the company's market cap fell to ₩1.4t last week after a 6.2% drop in the share price. This set of investors may especially be concerned about the current loss, which adds to a one-year loss of 21% for shareholders. Also referred to as "smart money", institutions have a lot of sway over how a stock's price moves. As a result, if the downtrend continues, institutions may face pressures to sell Hansol Chemical, which might have negative implications on individual investors.

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

Check out our latest analysis for Hansol Chemical

ownership-breakdown
KOSE:A014680 Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About Hansol Chemical?

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.

As you can see, institutional investors have a fair amount of stake in Hansol Chemical. 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. 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 Hansol Chemical's historic earnings and revenue below, but keep in mind there's always more to the story.

earnings-and-revenue-growth
KOSE:A014680 Earnings and Revenue Growth October 14th 2024

Hansol Chemical is not owned by hedge funds. Our data shows that National Pension Service is the largest shareholder with 10.0% of shares outstanding. For context, the second largest shareholder holds about 9.0% of the shares outstanding, followed by an ownership of 6.6% by the third-largest shareholder.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Hansol Chemical

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.

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 information suggests that insiders maintain a significant holding in Hansol Chemical Co., Ltd.. Insiders own ₩218b worth of shares in the ₩1.4t company. That's quite meaningful. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for Hansol Chemical that you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.