Both retail investors who control a good portion of Microvast Holdings, Inc. (NASDAQ:MVST) along with institutions must be dismayed after last week's 13% decrease
Key Insights
The considerable ownership by retail investors in Microvast Holdings indicates that they collectively have a greater say in management and business strategy
43% of the business is held by the top 25 shareholders
Every investor in Microvast Holdings, Inc. (NASDAQ:MVST) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are retail investors with 39% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
While the holdings of retail investors took a hit after last week’s 13% price drop, institutions with their 32% holdings also suffered.
In the chart below, we zoom in on the different ownership groups of Microvast Holdings.
Check out our latest analysis for Microvast Holdings
What Does The Institutional Ownership Tell Us About Microvast Holdings?
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.
We can see that Microvast Holdings does have institutional investors; and they hold a good portion of the company's stock. 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 Microvast Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.
Microvast Holdings is not owned by hedge funds. With a 27% stake, CEO Yang Wu is the largest shareholder. For context, the second largest shareholder holds about 3.7% of the shares outstanding, followed by an ownership of 3.3% by the third-largest shareholder.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
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 Microvast Holdings
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
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 a reasonable proportion of Microvast Holdings, Inc.. It has a market capitalization of just US$554m, and insiders have US$162m worth of shares in their own names. 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
The general public-- including retail investors -- own 39% stake in the company, and hence can't easily be ignored. 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.
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. Take risks for example - Microvast Holdings has 4 warning signs (and 1 which is concerning) we think you should know about.
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.
