A look at the shareholders of Kunlun Energy Company Limited (HKG:135) 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. Companies that have been privatized tend to have low insider ownership.
Kunlun Energy is a pretty big company. It has a market capitalization of HK$61b. Normally institutions would own a significant portion of a company this size. In the chart below, we can see that institutions own shares in the company. Let’s delve deeper into each type of owner, to discover more about Kunlun Energy.
What Does The Institutional Ownership Tell Us About Kunlun Energy?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
Kunlun Energy already has institutions on the share registry. Indeed, they own 20% of the company. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone, since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there’s always a risk that they are in a ‘crowded trade’. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Kunlun Energy’s historic earnings and revenue, below, but keep in mind there’s always more to the story.
Hedge funds don’t have many shares in Kunlun Energy. Looking at our data, we can see that the largest shareholder is China National Petroleum Corporation with 58% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. The second and third largest shareholders are BlackRock, Inc. and Franklin Resources, Inc., holding 4.9% and 4.4%, respectively.
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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Kunlun Energy
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.
Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.
Our information suggests that Kunlun Energy Company Limited insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven’t picked up on. Keep in mind that it’s a big company, and the insiders own HK$7.0m worth of shares. The absolute value might be more important than the proportional share. When analysing a company, looking at ownership may seem a logical place to start. But ultimately, many risks exist within the business itself, rather than its shareholders. For example, we’ve discovered 2 warning signs for Kunlun Energy which any shareholder or potential investor should be aware of.
General Public Ownership
The general public holds a 23% stake in 135. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Private Company Ownership
We can see that Private Companies own 58%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.
It’s always worth thinking about the different groups who own shares in a company. But to understand Kunlun Energy better, we need to consider many other factors.
I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.
If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.
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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