In this article, I’m going to take a look at Byte Power Group Limited’s (ASX:BPG) latest ownership structure, a non-fundamental factor which is important, but remains a less discussed subject among investors. Ownership structure has been found to have an impact on shareholder returns in both short- and long-term. 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 BPG’s shareholder registry.

Check out our latest analysis for Byte Power Group

Insider Ownership

Insiders form another group of important ownership types as they manage the company’s operations and decide the best use of capital. Insider ownership has been linked to better alignment between management and shareholders. A major group of owners of BPG is individual insiders, sitting with a hefty 66.81% stake in the company. Broadly, insider ownership of this level has been found to negatively affect companies with consistently low PE ratio (underperforming). And a positive impact has been seen on companies with a high PE ratio (outperforming). Another aspect of insider ownership is to learn about their recent transactions. Insider buying may be a sign of upbeat future expectations, however, selling doesn’t necessarily mean the opposite as insiders may be motivated by their personal financial needs.

General Public Ownership

With 3.56% ownership, the general public are a relatively smaller ownership class in BPG. This size of ownership may not be enough to sway a policy decision in their favour, but they can still make a collective impact on company policies if it aligns with other large shareholders.

Private Company Ownership

Potential investors in BPG should also look at another important group of investors: private companies, with a stake of 1.31%, who are primarily invested because of strategic and capital gain interests. However, an ownership of this size may be relatively insignificant, meaning that these shareholders may not have the potential to influence BPG’s business strategy. Thus, investors not need worry too much about the consequences of these holdings.

Next Steps:

A relatively significant holding of company insiders could mean high alignment with shareholders. But at the same time, investors should be aware of the level of influence executives could have on governance decisions. However, ownership structure should not be the only determining factor when you’re building an investment thesis for BPG. Instead, you should be evaluating company-specific factors such as the intrinsic valuation, which is a key driver of Byte Power Group’s share price. I highly recommend you to complete your research by taking a look at the following: