Free float is the proportion of shares that are held in the hands of public investors. Another way to putting it is that outside investors hold a large amount of company shares, as opposed to its shares being locked-up with founders, company management, investors with controlling interest or the government.
One thing to note is that even though a significant proportion of a company’s shares might be with public investors, it doesn’t mean that its shares is always traded or will be the most liquid. This is simply because large or institutional investors may still have bought the company’s shares as long-term investments rather than to trade on a short-term basis.
Typically, companies with a large free float will have lower volatility as investors, both those who have and haven’t invested in the company, are actively participating in the buying and selling of company shares according to economic data, market news, industry trends and even company-specific information. Since there is a large amount of shares to go around, the company’s price will fluctuate by a reasonable amount.
When a large amount of company shares are held by insiders, there will a limited amount of shares to trade in the market, and hence, volatility can drastically increase when market participants buy and sell the shares.
Below are four companies with more than 90% of its shares held in the hands of public investors, according to SGX’s StockFacts.
#1 Ezion Holdings Limited (SGX: 5ME)
Ezion provides offshore marine logistics and support services to the oil and gas, and marine and offshore industries.
According to StockFacts, Ezion’s free float is nearly 93.5%. On its latest annual report, its CEO has a deemed interest of more than 9% of the company.
In the year-to-date, Ezion’s share price has continue to be affected by the sluggish offshore and marine industry, and has declined from $0.19 to $0.05.
#2 Manulife US Real Estate Investment Trust (SGX: BTOU)
Listed in May 2016, ManuLife US REIT is the first pure-play US office REIT listed in Asia. Currently, Manulife US REIT holds seven freehold prime office properties in Los Angeles, Irvine, Orange County, Atlanta, New Jersey and Washington D.C, valued at US$1.7 billion.
Manulife US REIT also pays out a distribution of close to 6.5% per annum.
According to StockFacts, Manulife US REIT has a free float of close to 93%. On its latest annual report, Manulife (International) Limited is listed as the only substantial unitholder, holding close 6.5% of its shares.
#3 Cache Logistics Trust (SGX: K2LU)
Cache Logistics Trust is a REIT with a portfolio of 27 high quality logistics warehouse properties in Singapore, Australia and China, valued at close to $1.3 billion.
It also pays out a distribution of close to 9% per annum.
On StockFacts, Cache Logistics Trust has a listed free float of almost 93%. Based on its annual report, its only substantial shareholder is a group of companies owned by Prudential. It is also stated that the reason for this is because of units managed by its fund managers.
#4 Frasers Commercial Trust (SGX: ND8U)
Frasers Commercial Trust is a REIT with a portfolio of six office properties, in Singapore, Australia and the UK, valued at $2.1 billion.
Frasers Commercial Trust pays out a distribution of close to 7% per annum.
On StockFacts, Frasers Commercial trust has a listed free float of more than 87%. Its annual report also states that Frasers Centrepoint Limited, as well as a listed of other related entities, has a deemed interest of nearly 27% in the REIT. Frasers Centrepoint Limited is itself a listed company with individual shareholders, which may explain why Frasers Commercial Trust’s its free float is listed as 87%.
If you are interested to read more about Singapore stocks, you can check out our extensive archive of articles of 4 Stocks This Week. To stay up to date with the latest news on the Singapore Exchange, you also can check out the SGX My Gateway Market Updates to get more insights.
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