The Ever-Glory International Group Inc (NASDAQ:EVK) Ownership Structure Could Be Important

If you want to know who really controls Ever-Glory International Group Inc (NASDAQ:EVK), then you’ll have to look at the makeup of its share registry. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

With a market capitalization of US$48m, Ever-Glory International Group is a small cap stock, so it might not be well known by many institutional investors. In the chart below below, we can see that institutions don’t own many shares in the company. We can zoom in on the different ownership groups, to learn more about EVK.

Check out our latest analysis for Ever-Glory International Group

NasdaqGM:EVK Ownership Summary October 5th 18
NasdaqGM:EVK Ownership Summary October 5th 18

What Does The Lack Of Institutional Ownership Tell Us About Ever-Glory International Group?

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. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Ever-Glory International Group’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.

NasdaqGM:EVK Income Statement Export October 5th 18
NasdaqGM:EVK Income Statement Export October 5th 18

Ever-Glory International Group is not owned by hedge funds. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Ever-Glory International Group

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.

Our most recent data indicates that insiders own a reasonable proportion of Ever-Glory International Group Inc. Insiders own US$16m worth of shares in the US$48m company. 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, with a 28% 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.

Private Company Ownership

It seems that Private Companies own 38%, of the EVK stock. 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.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Ever-Glory International Group better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.