A look at the shareholders of Sanbase Corporation Limited (HKG:8501) can tell us which group is most powerful. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, ‘Don’t tell me what you think, tell me what you have in your portfolio.
Sanbase is not a large company by global standards. It has a market capitalization of HK$98m, which means it wouldn’t have the attention of many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. We can zoom in on the different ownership groups, to learn more about Sanbase.
What Does The Lack Of Institutional Ownership Tell Us About Sanbase?
Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.
There could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don’t attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Sanbase’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.
Sanbase is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is the CEO Sai Wong with 56% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It’s usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we’re glad to see a company insider with such skin in the game. The second largest shareholder is Chief Operating Officer Kin Wong holding19%.
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. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Sanbase
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.
Our information suggests that insiders own more than half of Sanbase Corporation Limited. This gives them effective control of the company. Given it has a market cap of HK$98m, that means they have HK$74m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public holds a 25% stake in 8501. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
It’s always worth thinking about the different groups who own shares in a company. But to understand Sanbase better, we need to consider many other factors. For example, we’ve discovered 4 warning signs for Sanbase (1 is a bit unpleasant!) that you should be aware of before investing here.
If you would prefer check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, backed by strong financial data.
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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