In This Article:
In this article, I will take a quick look at Great Wall Pan Asia Holdings Limited’s (HKG:583) recent ownership structure – an unconventional investing subject, but an important one. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. Since the same amount of capital coming from an activist institution and a passive mutual fund has different implications on corporate governance, it is a useful exercise to deconstruct 583’s shareholder registry.
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Institutional Ownership
In 583’s case, institutional ownership stands at 24.01%, significant enough to cause considerable price moves in the case of large institutional transactions, especially when there is a low level of public shares available on the market to trade. Although 583 has a high institutional ownership, such stock moves, in the short-term, are more commonly linked to a particular type of active institutional investors – hedge funds. For 583 shareholders, the potential of this type of share price volatility shouldn’t be as concerning as hedge fund ownership is is not significant,indicating few chances of such sudden price moves. While that hardly seems concerning, I will explore further into 583’s ownership type to find out how it can affect the company’s investment profile.
General Public Ownership
A big stake of 15.23% in 583 is held by the general public. This level of ownership gives retail investors the power to sway key policy decisions such as board composition, executive compensation, and potential acquisitions. This is a positive sign for an investor who wants to be involved in key decision-making of the company.
Private Company Ownership
Potential investors in 583 should also look at another important group of investors: private companies, with a stake of 60.77%, who are primarily invested because of strategic and capital gain interests. With this size of ownership in 583, this ownership class can affect the company’s business strategy. As a result, potential investors should further explore the company’s business relations with these companies and find out if they can affect shareholder returns in the long-term.
Next Steps:
583’s considerably high level of institutional ownership calls for further analysis into its margin of safety. This will enable shareholders to comfortably invest in the company while avoid getting trapped in a sustained sell-off that is often observed in stocks with this level of institutional participation. However, ownership structure should not be the only focus of your research when constructing an investment thesis around 583. Instead, you should be evaluating company-specific factors such as Great Wall Pan Asia Holdings’s past track record and financial health. I highly recommend you to complete your research by taking a look at the following: