Private companies are Ri Ying Holdings Limited's (HKG:1741) biggest owners and were hit after market cap dropped HK$112m

Key Insights

• The considerable ownership by private companies in Ri Ying Holdings indicates that they collectively have a greater say in management and business strategy
• Elite Bright Developments Limited owns 51% of the company
• Insider ownership in Ri Ying Holdings is 23%

Every investor in Ri Ying Holdings Limited (HKG:1741) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 51% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to HK$808m last week, private companies would have faced the highest losses than any other shareholder groups of the company.

Let's take a closer look to see what the different types of shareholders can tell us about Ri Ying Holdings.

See our latest analysis for Ri Ying Holdings

What Does The Lack Of Institutional Ownership Tell Us About Ri Ying Holdings?

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. Ri Ying Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Ri Ying Holdings. The company's largest shareholder is Elite Bright Developments Limited, with ownership of 51%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 15% and 8.0%, of the shares outstanding, respectively. Wei Sun, who is the second-largest shareholder, also happens to hold the title of Senior Key Executive.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. 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 Ri Ying Holdings

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

It seems insiders own a significant proportion of Ri Ying Holdings Limited. It has a market capitalization of just HK$808m, and insiders have HK$185m 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 usually individual investors, hold a 26% stake in Ri Ying 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.

Private Company Ownership

We can see that Private Companies own 51%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Ri Ying Holdings better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Ri Ying Holdings you should be aware of, and 2 of them make us uncomfortable.

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.

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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.