Do Insiders Own Lots Of Shares In Xinyuan Real Estate Co., Ltd. (NYSE:XIN)?

A look at the shareholders of Xinyuan Real Estate Co., Ltd. (NYSE:XIN) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. 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.

Xinyuan Real Estate is a smaller company with a market capitalization of US$126m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutional investors have not yet purchased much of the company. We can zoom in on the different ownership groups, to learn more about Xinyuan Real Estate.

View our latest analysis for Xinyuan Real Estate

NYSE:XIN Ownership Summary, March 24th 2020
NYSE:XIN Ownership Summary, March 24th 2020

What Does The Institutional Ownership Tell Us About Xinyuan Real Estate?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

Less than 5% of Xinyuan Real Estate is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

NYSE:XIN Income Statement, March 24th 2020
NYSE:XIN Income Statement, March 24th 2020

Xinyuan Real Estate is not owned by hedge funds. With a 23% stake, CEO Yong Zhang is the largest shareholder. With 23% and 1.1% of the shares outstanding respectively, Yuyan Yang and Dimensional Fund Advisors L.P. are the second and third largest shareholders. Interestingly, Yuyan Yang is also a Top Key Executive, again, pointing towards strong insider ownership amongst the company’s top shareholders.

A deeper look at our ownership data shows that the top 25 shareholders collectively hold less than 50% of the register, suggesting a large group of small holders where no one share holder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Xinyuan Real Estate

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders maintain a significant holding in Xinyuan Real Estate Co., Ltd.. It has a market capitalization of just US$126m, and insiders have US$58m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 50% of Xinyuan Real Estate shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

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. Consider for instance, the ever-present spectre of investment risk. We’ve identified 3 warning signs with Xinyuan Real Estate (at least 1 which can’t be ignored) , and understanding them should be part of your investment process.

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.

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