Key Insights

• Significant control over Synagistics by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 52% of the company
• Insider ownership in Synagistics is 32%

To get a sense of who is truly in control of Synagistics Limited (HKG:2562), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 41% to be precise, is public companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 29% decrease in the stock price last week, public companies suffered the most losses, but insiders who own 32% stock also took a hit.

Let's delve deeper into each type of owner of Synagistics, beginning with the chart below.

What Does The Lack Of Institutional Ownership Tell Us About Synagistics?

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 multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Synagistics' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Hedge funds don't have many shares in Synagistics. Alibaba Group Holding Limited is currently the largest shareholder, with 34% of shares outstanding. With 18% and 16% of the shares outstanding respectively, Shieh-Peen Lee and Gobi Partners are the second and third largest shareholders. Shieh-Peen Lee, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. In addition, we found that Ho Yan Tai, the CEO has 5.7% of the shares allocated to their name.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Synagistics

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.

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 insiders own a significant proportion of Synagistics Limited. Insiders have a HK$1.7b stake in this HK$5.3b business. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 10% 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 Equity Ownership

Private equity firms hold a 16% stake in Synagistics. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Public Company Ownership

We can see that public companies hold 41% of the Synagistics shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Synagistics better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Synagistics you should be aware of.

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.