The considerable ownership by private companies in Hong Leong Finance indicates that they collectively have a greater say in management and business strategy
The largest shareholder of the company is Hong Leong Investment Holdings Pte. Ltd. with a 55% stake
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
Every investor in Hong Leong Finance Limited (SGX:S41) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 57% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).
Meanwhile, individual investors make up 33% of the company’s shareholders.
In the chart below, we zoom in on the different ownership groups of Hong Leong Finance.
What Does The Institutional Ownership Tell Us About Hong Leong Finance?
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 Hong Leong Finance does have institutional investors; and they hold a good portion of the company's stock. 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. 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 Hong Leong Finance's historic earnings and revenue below, but keep in mind there's always more to the story.
SGX:S41 Earnings and Revenue Growth July 31st 2024
Hong Leong Finance is not owned by hedge funds. Our data shows that Hong Leong Investment Holdings Pte. Ltd. is the largest shareholder with 55% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 3.1% of the shares outstanding, followed by an ownership of 2.0% by the third-largest shareholder. In addition, we found that Leng Beng Kwek, the CEO has 1.5% of the shares allocated to their name.
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. 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 Hong Leong Finance
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 most recent data indicates that insiders own some shares in Hong Leong Finance Limited. As individuals, the insiders collectively own S$43m worth of the S$1.1b company. Some would say this shows alignment of interests between shareholders and the board. But it might be worth checking if those insiders have been selling.
General Public Ownership
The general public-- including retail investors -- own 33% 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.
Private Company Ownership
We can see that Private Companies own 57%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Hong Leong Finance better, we need to consider many other factors. For example, we've discovered 1 warning sign for Hong Leong Finance that you should be aware of before investing here.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
