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A look at the shareholders of SBS Transit Ltd (SGX:S61) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.
SBS Transit is a smaller company with a market capitalization of S$1.0b, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see that institutional investors have bought into the company. We can zoom in on the different ownership groups, to learn more about S61.
Check out our latest analysis for SBS Transit
What Does The Institutional Ownership Tell Us About SBS Transit?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
SBS Transit already has institutions on the share registry. Indeed, they own 5.3% of the company. 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. 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 SBS Transit, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in SBS Transit. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of SBS Transit
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
I can report that insiders do own shares in SBS Transit Ltd. As individuals, the insiders collectively own S$11m worth of the S$1.0b 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.