Today, I will be analyzing TA Corporation Ltd’s (SGX:PA3) recent ownership structure, an important but not-so-popular subject among individual investors. When it comes to ownership structure of a company, the impact has been observed in both the long-and short-term performance of shares. Differences in ownership structure of companies can have a profound effect on how management’s incentives are aligned with shareholder returns, which is why we’ll take a moment to analyse PA3’s shareholder registry. All data provided is as of the most recent financial year end.
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Institutional Ownership
With an institutional ownership of 12.41%, PA3 can face volatile stock price movements if institutions execute block trades on the open market, more so, when there are relatively small amounts of shares available on the market to trade However, as not all institutions are alike, such high volatility events, especially in the short-term, have been more frequently linked to active market participants like hedge funds. In the case of PA3, investors need not worry about such volatility considering active hedge funds don’t have a significant stake. However, we should dig deeper into PA3’s ownership structure and find out how other key ownership classes can affect its investment profile.
Insider Ownership
I find insiders are another important group of stakeholders, who are directly involved in making key decisions related to the use of capital. In essence, insider ownership is more about the alignment of shareholders’ interests with the management. 85.60% ownership of PA3 insiders is large enough to make an impact on shareholder returns. In general, this level of insider ownership has negatively affected underperforming (consistently low PE ratio) companies and positively affected the companies that outperform (consistently high PE ratio). It may be interesting to take a look at what company insiders have been doing with their holdings lately. Insiders buying company shares can be a positive indicator of future performance, but a selling decision can simply be driven by personal financial needs.
General Public Ownership
The general public holds 1.81% stake in PA3, which represents a relatively small class of owners. This size of ownership, while considerably small for a public company, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Public Company Ownership
Another group of owners that a potential investor in PA3 should consider are other public companies, with a stake of 0.19%. While they invest more often due to strategic interests, an investment can also be driven by capital gains through share price appreciation. However, an ownership of this size may be relatively insignificant, meaning that these shareholders may not have the potential to influence PA3’s business strategy. Thus, investors not need worry too much about the consequences of these holdings.