Yahoo Finance City Developments Limited's (SGX:C09) market cap surged S$284m last week, private companies who have a lot riding on the company were rewarded
Key Insights
Significant control over City Developments by private companies implies that the general public has more power to influence management and governance-related decisions
Hong Leong Investment Holdings Pte. Ltd. owns 54% of the company
Every investor in City Developments Limited (SGX:C09) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 59% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Clearly, private companies benefitted the most after the company's market cap rose by S$284m last week.
In the chart below, we zoom in on the different ownership groups of City Developments.
View our latest analysis for City Developments
What Does The Institutional Ownership Tell Us About City Developments?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
As you can see, institutional investors have a fair amount of stake in City Developments. 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 City Developments' historic earnings and revenue below, but keep in mind there's always more to the story.
City Developments is not owned by hedge funds. The company's largest shareholder is Hong Leong Investment Holdings Pte. Ltd., with ownership of 54%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. BlackRock, Inc. is the second largest shareholder owning 5.1% of common stock, and The Vanguard Group, Inc. holds about 2.2% of the company stock.
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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of City Developments
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.
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 most recent data indicates that insiders own less than 1% of City Developments Limited. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It's a big company, so even a small proportional interest can create alignment between the board and shareholders. In this case insiders own S$2.4m worth of shares. 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 25% stake in City Developments. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.
Private Company Ownership
We can see that Private Companies own 59%, 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand City Developments better, we need to consider many other factors. For example, we've discovered 3 warning signs for City Developments (1 is significant!) that you should be aware of before investing here.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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.
