Montage Technology Co., Ltd.'s (SHSE:688008) large institutional owners must be happy as stock continues to impress, up 5.2% over the past week

Simply Wall St · 10/18 23:34

Key Insights

  • Institutions' substantial holdings in Montage Technology implies that they have significant influence over the company's share price
  • The top 21 shareholders own 51% of the company
  • Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business

To get a sense of who is truly in control of Montage Technology Co., Ltd. (SHSE:688008), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And things are looking up for institutional investors after the company gained CN¥3.9b in market cap last week. One-year return to shareholders is currently 44% and last week’s gain was the icing on the cake.

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

View our latest analysis for Montage Technology

ownership-breakdown
SHSE:688008 Ownership Breakdown October 18th 2024

What Does The Institutional Ownership Tell Us About Montage Technology?

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.

As you can see, institutional investors have a fair amount of stake in Montage Technology. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Montage Technology, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SHSE:688008 Earnings and Revenue Growth October 18th 2024

Montage Technology is not owned by hedge funds. Our data shows that China Asset Management Co. Ltd. is the largest shareholder with 6.4% of shares outstanding. China Electronics Corporation is the second largest shareholder owning 6.1% of common stock, and Zhuhai Rongying Equity Investment Partnership Enterprise (Limited Partnership) holds about 5.3% of the company stock.

Looking at the shareholder registry, we can see that 51% of the ownership is controlled by the top 21 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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Montage Technology

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. 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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our data suggests that insiders own under 1% of Montage Technology Co., Ltd. in their own names. However, it's possible that insiders might have an indirect interest through a more complex structure. As it is a large company, we'd only expect insiders to own a small percentage of it. But it's worth noting that they own CN¥269m 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

The general public-- including retail investors -- own 39% 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 Equity Ownership

Private equity firms hold a 5.3% stake in Montage Technology. 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. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Montage Technology you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.