Could Golden Faith Group Holdings Limited’s (HKG:2863) Investor Composition Influence The Stock Price?

If you want to know who really controls Golden Faith Group Holdings Limited (HKG:2863), then you’ll have to look at the makeup of its share registry. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. 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.

With a market capitalization of HK$226m, Golden Faith Group Holdings is a small cap stock, so it might not be well known by many institutional investors. In the chart below, we can see that institutional investors have not yet purchased shares. Let’s delve deeper into each type of owner, to discover more about Golden Faith Group Holdings.

Check out our latest analysis for Golden Faith Group Holdings

SEHK:2863 Ownership Summary, February 15th 2020
SEHK:2863 Ownership Summary, February 15th 2020

What Does The Lack Of Institutional Ownership Tell Us About Golden Faith Group Holdings?

Small companies that are not very actively traded often lack institutional investors, but it’s less common to see large companies without them.

There are multiple explanations for why institutions don’t own a stock. The most common is that the company is too small relative to fund under management, so the institition does not bother to look closely at the company. On the other hand, it’s always possible that professional investors are avoiding a company because they don’t think it’s the best place for their money. Golden Faith Group Holdings’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.

SEHK:2863 Income Statement, February 15th 2020
SEHK:2863 Income Statement, February 15th 2020

We note that hedge funds don’t have a meaningful investment in Golden Faith Group Holdings. Our data suggests that Chun Hay Ko, who is also the company’s Senior Key Executive, holds the most number of shares at 57%. When an insider holds a sizeable amount of a company’s stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. Next, we have Kam-Fai Cheung and On Wah Yung as the second and third largest shareholders, holding 9.2% and 6.7%, of the shares outstanding, respectively. Interestingly, On Wah Yung is also a Chairman of the Board, again, indicating strong insider ownership amongst the company’s top shareholders.

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. We’re not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Golden Faith Group Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

It seems that insiders own more than half the Golden Faith Group Holdings Limited stock. This gives them a lot of power. That means they own HK$178m worth of shares in the HK$226m company. That’s quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, with a 21% stake in the company, will not easily be ignored. 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.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. For example, we’ve discovered 1 warning sign for Golden Faith Group Holdings that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.