Insiders appear to have a vested interest in Waterco's growth, as seen by their sizeable ownership
Soon Goh owns 55% of the company
Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
A look at the shareholders of Waterco Limited (ASX:WAT) can tell us which group is most powerful. With 66% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
So it follows, every decision made by insiders of Waterco regarding the company's future would be crucial to them.
In the chart below, we zoom in on the different ownership groups of Waterco.
What Does The Lack Of Institutional Ownership Tell Us About Waterco?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Waterco might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
ASX:WAT Earnings and Revenue Growth July 18th 2024
We note that hedge funds don't have a meaningful investment in Waterco. The company's CEO Soon Goh is the largest shareholder with 55% of shares outstanding. This implies that they possess majority interests and have significant control over the company. Investors usually consider it a good sign when the company leadership has such a significant stake, as this is widely perceived to increase the chance that the management will act in the best interests of the company. Acres Holdings Pty Ltd. is the second largest shareholder owning 8.4% of common stock, and Goh Lai Huat & Sons Sdn Bhd holds about 7.1% of the company stock.
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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.
Insider Ownership Of Waterco
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. 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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
It seems that insiders own more than half the Waterco Limited stock. This gives them a lot of power. Given it has a market cap of AU$179m, that means they have AU$118m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public-- including retail investors -- own 16% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
It seems that Private Companies own 18%, of the Waterco stock. 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.
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.
