Institutional investors may adopt severe steps after Magnachip Semiconductor Corporation's (NYSE:MX) latest 10% drop adds to a year losses
Key Insights
Institutions' substantial holdings in Magnachip Semiconductor implies that they have significant influence over the company's share price
A total of 16 investors have a majority stake in the company with 51% ownership
Every investor in Magnachip Semiconductor Corporation (NYSE:MX) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are institutions with 76% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
As a result, institutional investors endured the highest losses last week after market cap fell by US$32m. Needless to say, the recent loss which further adds to the one-year loss to shareholders of 35% might not go down well especially with this category of shareholders. Institutions or "liquidity providers" control large sums of money and therefore, these types of investors usually have a lot of influence over stock price movements. As a result, if the decline continues, institutional investors may be pressured to sell Magnachip Semiconductor which might hurt individual investors.
Let's take a closer look to see what the different types of shareholders can tell us about Magnachip Semiconductor.
See our latest analysis for Magnachip Semiconductor
What Does The Institutional Ownership Tell Us About Magnachip Semiconductor?
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 Magnachip Semiconductor 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Magnachip Semiconductor's earnings history below. Of course, the future is what really matters.
Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Magnachip Semiconductor is not owned by hedge funds. Brookfield Corporation is currently the company's largest shareholder with 7.4% of shares outstanding. For context, the second largest shareholder holds about 6.0% of the shares outstanding, followed by an ownership of 5.6% by the third-largest shareholder. In addition, we found that Young-Joon Kim, the CEO has 1.3% of the shares allocated to their name.
A closer look at our ownership figures suggests that the top 16 shareholders have a combined ownership of 51% implying that no single shareholder has a majority.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Magnachip Semiconductor
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.
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.
We can report that insiders do own shares in Magnachip Semiconductor Corporation. As individuals, the insiders collectively own US$9.4m worth of the US$279m company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public, who are usually individual investors, hold a 21% stake in Magnachip Semiconductor. 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.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Magnachip Semiconductor better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Magnachip Semiconductor you should be aware of.
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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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.
