Do Insiders Own Lots Of Shares In CooTek (Cayman) Inc. (NYSE:CTK)?

The big shareholder groups in CooTek (Cayman) Inc. (NYSE:CTK) have power over the company. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes ‘a business with enduring competitive advantages that is run by able and owner-oriented people’. So it’s nice to see some insider ownership, because it may suggest that management is owner-oriented.

With a market capitalization of US$391m, CooTek (Cayman) is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutions are not really that prevalent on the share registry. Let’s take a closer look to see what the different types of shareholder can tell us about CooTek (Cayman).

Check out our latest analysis for CooTek (Cayman)

NYSE:CTK Ownership Summary, February 14th 2020
NYSE:CTK Ownership Summary, February 14th 2020

What Does The Lack Of Institutional Ownership Tell Us About CooTek (Cayman)?

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. CooTek (Cayman) might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

NYSE:CTK Income Statement, February 14th 2020
NYSE:CTK Income Statement, February 14th 2020

Hedge funds don’t have many shares in CooTek (Cayman). Sequoia Capital China is currently the company’s largest shareholder with 18% of shares outstanding. Next, we have Qiming Weichuang Venture Capital Management (Shanghai) Company Limited and SIG Asia Investments, LLLP as the second and third largest shareholders, holding 17% and 13%, of the shares outstanding, respectively.

On studying the facts and figures more closely, we found that the top 4 shareholders control 56% of the company which implies that this group has considerable sway over the company’s decision-making.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock’s expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of CooTek (Cayman)

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

It seems insiders own a significant proportion of CooTek (Cayman) Inc.. It has a market capitalization of just US$391m, and insiders have US$99m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 26% ownership, the general public have some degree of sway over CTK. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

Private equity firms hold a 48% stake in CTK. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and — as the name suggests — don’t invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 2 warning signs we’ve spotted with CooTek (Cayman) (including 1 which is is a bit unpleasant) .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.