Significant control over Singapore Airlines by private equity firms implies that the general public has more power to influence management and governance-related decisions
53% of the company is held by a single shareholder (Temasek Holdings (Private) Limited)
Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business
Every investor in Singapore Airlines Limited (SGX:C6L) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 53% to be precise, is private equity firms. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Meanwhile, individual investors make up 37% of the company’s shareholders.
Let’s take a closer look to see what the different types of shareholders can tell us about Singapore Airlines.
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 Singapore Airlines. 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 Singapore Airlines’ historic earnings and revenue below, but keep in mind there’s always more to the story.
SGX:C6L Earnings and Revenue Growth December 20th 2024
Hedge funds don’t have many shares in Singapore Airlines. Temasek Holdings (Private) Limited is currently the company’s largest shareholder with 53% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 1.9% and 1.5%, of the shares outstanding, respectively.
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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our data suggests that insiders own under 1% of Singapore Airlines Limited in their own names. Being so large, we would not expect insiders to own a large proportion of the stock. Collectively, they own S$51m of stock. Arguably recent buying and selling is just as important to consider. You can click here to see if insiders have been buying or selling.
With a 37% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Singapore Airlines. 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.
With an ownership of 53%, private equity firms are in a position to play a role in shaping corporate strategy with a focus on value creation. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.
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.
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