Institutional owners may ignore ASMPT Limited's (HKG:522) recent HK$2.2b market cap decline as longer-term profits stay in the green

Simply Wall St.2023-10-25

Key Insights Institutions' substantial holdings in ASMPT implies that they have significant influence over the company's share price A total of 4 investors have a majority stake in the company with...

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The group holding the most number of shares in the company, around 50% to be precise, is institutions.   In other words, the group stands to gain the most (or lose the most) from their investment into the company.  Losing money on investments is something no shareholder enjoys, least of all institutional investors who saw their holdings value drop by 7.2% last week.  However, the 61% one-year return to shareholders may have helped lessen their pain.  We would assume however, that they would be on the lookout for weakness in the future.     In the chart below, we zoom in on the different ownership groups of ASMPT.  See our latest analysis for ASMPT SEHK:522 Ownership Breakdown October 25th 2023 What Does The Institutional Ownership Tell Us About ASMPT? 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.   ASMPT already has institutions on the share registry. Indeed, they own a respectable stake in the company.  This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes.  When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see ASMPT's historic earnings and revenue below, but keep in mind there's always more to the story. SEHK:522 Earnings and Revenue Growth October 25th 2023  Investors should note that institutions actually own more than half the company, so they can collectively wield significant power.    Hedge funds don't have many shares in ASMPT.      Our data shows that ASM International NV is the largest shareholder with 25% of shares outstanding.       For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 5.0% by the third-largest shareholder.     Our research also brought to light the fact that roughly 52% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.     While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance.   There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.  Insider Ownership Of ASMPT 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.  I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.   Our information suggests that ASMPT Limited insiders own under 1% of the company.   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 HK$41m 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-- including retail investors -- own 20% stake in the company, and hence can't easily be ignored.   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.  Public Company Ownership We can see that public companies hold 25% of the ASMPT shares on issue.  We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.   Next Steps: I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too.    To that end, you should be aware of the   2 warning signs  we've spotted with ASMPT .     But ultimately  it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.Valuation is complex, but we're helping make it simple.Find out whether ASMPT is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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. 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