Highwealth Construction Corp.'s (TWSE:2542) market cap dropped NT$2.9b last week; Retail investors bore the brunt

Simply Wall St · 10/14 22:32

Key Insights

  • Significant control over Highwealth Construction by retail investors implies that the general public has more power to influence management and governance-related decisions
  • 46% of the business is held by the top 25 shareholders
  • Institutions own 12% of Highwealth Construction

To get a sense of who is truly in control of Highwealth Construction Corp. (TWSE:2542), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are retail investors with 53% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And following last week's 3.1% decline in share price, retail investors suffered the most losses.

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

See our latest analysis for Highwealth Construction

ownership-breakdown
TWSE:2542 Ownership Breakdown October 14th 2024

What Does The Institutional Ownership Tell Us About Highwealth Construction?

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 Highwealth Construction 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 Highwealth Construction, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
TWSE:2542 Earnings and Revenue Growth October 14th 2024

Hedge funds don't have many shares in Highwealth Construction. Shidai Yingjia Investment Co., Ltd. is currently the largest shareholder, with 6.9% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 6.4% and 4.5%, of the shares outstanding, respectively. Furthermore, CEO Qintian Zheng is the owner of 1.9% of the company's shares.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than half of the register, suggesting a large group of small holders where 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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Highwealth Construction

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.

Our most recent data indicates that insiders own some shares in Highwealth Construction Corp.. The insiders have a meaningful stake worth NT$2.2b. Most would see this as a real positive. It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 53% of Highwealth Construction 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

It seems that Private Companies own 32%, of the Highwealth Construction stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

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. To that end, you should learn about the 2 warning signs we've spotted with Highwealth Construction (including 1 which can't be ignored) .

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.