The big shareholder groups in United Overseas Bank Limited (SGX:U11) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
United Overseas Bank has a market capitalization of S$44b, so it's too big to fly under the radar. We'd expect to see both institutions and retail investors owning a portion of the company. In the chart below, we can see that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about United Overseas Bank.
SGX:U11 Ownership Breakdown July 1st 2022What Does The Institutional Ownership Tell Us About United Overseas Bank?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
As you can see, institutional investors have a fair amount of stake in United Overseas Bank. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 United Overseas Bank's historic earnings and revenue below, but keep in mind there's always more to the story.
SGX:U11 Earnings and Revenue Growth July 1st 2022
Hedge funds don't have many shares in United Overseas Bank. Looking at our data, we can see that the largest shareholder is Cho-Yaw Wee with 11% of shares outstanding. Wee Investments Pte Ltd is the second largest shareholder owning 8.0% of common stock, and Wah Hin & Co Pte Ltd holds about 5.2% of the company stock. In addition, we found that Ee Cheong Wee, the CEO has 2.6% of the shares allocated to their name.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 16 shareholders, meaning that no single shareholder has a majority interest in the ownership.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of United Overseas Bank
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.
It seems insiders own a significant proportion of United Overseas Bank Limited. It has a market capitalization of just S$44b, and insiders have S$6.9b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them.
General Public Ownership
The general public, who are usually individual investors, hold a 39% stake in United Overseas Bank. 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
We can see that Private Companies own 20%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.
Public Company Ownership
We can see that public companies hold 4.0% of the United Overseas Bank shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.
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