Key Insights

• Significant control over TOM Group by public companies implies that the general public has more power to influence management and governance-related decisions
• The top 2 shareholders own 61% of the company
• Insider ownership in TOM Group is 34%

Every investor in TOM Group Limited (HKG:2383) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are public companies with 36% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of public companies took a hit after last week's 13% price drop, insiders with their 34% also suffered.

Let's take a closer look to see what the different types of shareholders can tell us about TOM Group.

Check out our latest analysis for TOM Group

What Does The Lack Of Institutional Ownership Tell Us About TOM Group?

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. TOM Group might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

TOM Group is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is CK Hutchison Holdings Limited with 36% of shares outstanding. For context, the second largest shareholder holds about 25% of the shares outstanding, followed by an ownership of 8.4% by the third-largest shareholder. Hoi Shuen Chau, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 TOM Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in TOM Group Limited. Insiders have a HK$980m stake in this HK$2.9b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over TOM Group. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Company Ownership

It seems that Private Companies own 4.7%, of the TOM Group stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

It appears to us that public companies own 36% of TOM Group. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - TOM Group has 1 warning sign we think 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.