Insiders are the top stockholders in Johnson Electric Holdings Limited (HKG:179), and the recent 4.3% drop might have disappointed them

Key Insights

• Significant insider control over Johnson Electric Holdings implies vested interests in company growth
• The largest shareholder of the company is Yik-Chun Wang Koo with a 65% stake
• Institutions own 21% of Johnson Electric Holdings

To get a sense of who is truly in control of Johnson Electric Holdings Limited (HKG:179), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 69% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 4.3%.

In the chart below, we zoom in on the different ownership groups of Johnson Electric Holdings.

Check out our latest analysis for Johnson Electric Holdings

What Does The Institutional Ownership Tell Us About Johnson Electric Holdings?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Johnson Electric Holdings does have institutional investors; and they hold a good portion of the company's stock. 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 Johnson Electric Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Johnson Electric Holdings. Our data shows that Yik-Chun Wang Koo is the largest shareholder with 65% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. With 3.8% and 3.1% of the shares outstanding respectively, Schroder Investment Management (Singapore) Ltd. and Kin-Chung Wang are the second and third largest shareholders. Kin-Chung Wang, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Johnson Electric Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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 most recent data indicates that insiders own the majority of Johnson Electric Holdings Limited. This means they can collectively make decisions for the company. That means insiders have a very meaningful HK$6.5b stake in this HK$9.5b business. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

With a 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Johnson Electric Holdings. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

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 Johnson Electric Holdings (including 1 which can't be ignored) .

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.