Major shareholders sell their shares.
The fact is usually found out after the announcement is made.
And by then it is already too late.
Why are changes in major shareholders’ shares important?
The major shareholder is the person who knows the inside of the company best.
Increasing shares → a sign that the future of the company is viewed positively
- Reduce stake → Signs you must check
In particular, the risk rises sharply when the following patterns overlap:
① Major shareholders’ shares fall to less than 30%
→ Governance structure becomes unstable, management rights become difficult to defend
② The timing of CB issuance and share sale overlap.
→ Funding through CB issuance → Sale of shares → Execution of actual exit strategy
③ Reduction in stake by more than 10% in a short period of time (within 6 months)
→ Structural departure signal
④ Simultaneous sale of majority shareholders’ shares and replacement of executives
→ Internal reorganization of the company = Reorganization of the relationship network = Increased risk
Heo Seo-young (2025) Empirical data
In companies where majority shareholders' shares decreased within the three months prior to the CB conversion event, minority shareholders' losses were statistically significantly greater.
In other words, major shareholders exit before the conversion volume pours in.
Individual investors find out after receiving the quantity.
How to check
DART Disclosure → “Report on ownership status of executives, major shareholders, specific securities, etc.”
2. Track changes in major shareholders’ shareholding ratio for more than 6 months
3. Comparison of change time and CB issuance/conversion time
RaymondsRisk analyzes changes in major shareholders' shares of 3,109 companies in real time with its CB underwriter network.
key message
When major shareholders start selling, individual investors are buying.
That timing difference is a loss.
■ Reference materials
Heo Seo-young (2025): An empirical study on CB conversion events and minority shareholder losses.
- Yang (2017): Demonstration of majority shareholder tunneling mechanism
- Kim et al. (2021): Expropriation structure and rising cost of capital
- RaymondsRisk White Paper: https://www.konnect-ai.net/whitepaper
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