Key Insights
Every investor in Sembcorp Industries Ltd (SGX:U96) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private equity firms with 49% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
As a result, private equity firms were the biggest beneficiaries of last week’s 4.3% gain.
Let’s delve deeper into each type of owner of Sembcorp Industries, beginning with the chart below.
Check out our latest analysis for Sembcorp Industries
What Does The Institutional Ownership Tell Us About Sembcorp Industries?
Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it’s included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
We can see that Sembcorp Industries does have institutional investors; and they hold a good portion of the company’s stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Sembcorp Industries, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in Sembcorp Industries. Temasek Holdings (Private) Limited is currently the company’s largest shareholder with 49% of shares outstanding. In comparison, the second and third largest shareholders hold about 3.2% and 1.9% of the stock.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company’s shares, implying that they have considerable power to influence the company’s decisions.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Sembcorp Industries
The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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.
Our most recent data indicates that insiders own less than 1% of Sembcorp Industries Ltd. It is a pretty big company, so it would be possible for board members to own a meaningful interest in the company, without owning much of a proportional interest. In this case, they own around S$89m worth of shares (at current prices). It is good to see board members owning shares, but it might be worth checking if those insiders have been buying.
General Public Ownership
The general public, who are usually individual investors, hold a 35% stake in Sembcorp Industries. 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 Equity Ownership
Private equity firms hold a 49% stake in Sembcorp Industries. 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.
Next Steps:
It’s always worth thinking about the different groups who own shares in a company. But to understand Sembcorp Industries better, we need to consider many other factors. Be aware that Sembcorp Industries is showing 2 warning signs in our investment analysis , and 1 of those is concerning…
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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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Read More: Private equity firms among Sembcorp Industries Ltd’s (SGX:U96) largest