Investing

Number of shares owned by management

Number of shares owned by the management team and the thirty largest shareholders is important to consider

At the last JAKS’ AGM I was out voted. As a result, I could not get a board representation even though my wife and I are substantial shareholders. I am not disappointed.

Studies show that the managerial ownership of a firm is directly correlated with the value of a firm. When the management possess high stakes in the company, naturally they will align their interest with that of the other shareholders, thus a better team performance and a higher firm value. In addition, the ownership level of the management reveals their confidence in the company. When you read an annual report, you should not ignore the number of shares owned by the top executive in the company as the data tells you more than just a number.

Similarly, the number of shares owned by the thirty largest shareholders should not be overlooked as it tells you the maximum percentage of shares left floating in the market currently. The lesser number of shares circulating in the market, the faster the share price soars when the business is performing better in the future. Further, you will be well-rewarded if you spot any super investors or gurus owning the stock and if you buy it below its intrinsic value.

I trust JAKS will secure another IPP contract in Myanmar where electricity is badly needed. If you visit Yangon you can see that almost every shop has a diesel power generator to electricity.

 

 

 

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