While institutions own 26% of Chang Hwa Commercial Bank, Ltd. (TWSE:2801), retail investors are its largest shareholders with 39% ownership

Simply Wall St · 10/15 22:03

Key Insights

  • The considerable ownership by retail investors in Chang Hwa Commercial Bank indicates that they collectively have a greater say in management and business strategy
  • A total of 12 investors have a majority stake in the company with 50% ownership
  • Institutions own 26% of Chang Hwa Commercial Bank

If you want to know who really controls Chang Hwa Commercial Bank, Ltd. (TWSE:2801), 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 39% to be precise, is retail investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Institutions, on the other hand, account for 26% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

Let's take a closer look to see what the different types of shareholders can tell us about Chang Hwa Commercial Bank.

Check out our latest analysis for Chang Hwa Commercial Bank

ownership-breakdown
TWSE:2801 Ownership Breakdown October 15th 2024

What Does The Institutional Ownership Tell Us About Chang Hwa Commercial Bank?

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 Chang Hwa Commercial Bank 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Chang Hwa Commercial Bank's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
TWSE:2801 Earnings and Revenue Growth October 15th 2024

We note that hedge funds don't have a meaningful investment in Chang Hwa Commercial Bank. Looking at our data, we can see that the largest shareholder is Ministry Of Finance, Taiwan with 12% of shares outstanding. For context, the second largest shareholder holds about 7.5% of the shares outstanding, followed by an ownership of 5.6% by the third-largest shareholder.

Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 12 shareholders, meaning that no single shareholder has a majority interest in the ownership.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Chang Hwa Commercial Bank

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.

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 Chang Hwa Commercial Bank, Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own NT$19m worth of shares. It is always good to see at least some insider ownership, but it might be worth checking if those insiders have been selling.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Chang Hwa Commercial Bank. 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 Equity Ownership

Private equity firms hold a 5.4% stake in Chang Hwa Commercial Bank. This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Private Company Ownership

Our data indicates that Private Companies hold 11%, 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

We can see that public companies hold 5.6% of the Chang Hwa Commercial Bank shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Chang Hwa Commercial Bank 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 Hwa Commercial Bank , and understanding them should be part of your investment process.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.