A HK$434m drop in the market cap of China Lesso Group Holdings Limited (HKG:2128) is not what insiders like to see after purchasing shares recently

Key Insights

• Significant insider control over China Lesso Group Holdings implies vested interests in company growth
• Luen Hei Wong owns 69% of the company
• Insiders have bought recently

To get a sense of who is truly in control of China Lesso Group Holdings Limited (HKG:2128), 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. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

It's interesting to note that insiders have been buying shares recently. However, with shares price down 4.0% last week, they must be disappointed.

Let's delve deeper into each type of owner of China Lesso Group Holdings, beginning with the chart below.

View our latest analysis for China Lesso Group Holdings

What Does The Institutional Ownership Tell Us About China Lesso Group Holdings?

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.

We can see that China Lesso Group 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at China Lesso Group Holdings' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in China Lesso Group Holdings. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In China Lesso Group Holdings' case, its Top Key Executive, Luen Hei Wong, is the largest shareholder, holding 69% of shares outstanding. With 1.2% and 1.2% of the shares outstanding respectively, The Vanguard Group, Inc. and Dimensional Fund Advisors LP are the second and third largest shareholders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of China Lesso Group 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.

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 information suggests that insiders own more than half of China Lesso Group Holdings Limited. This gives them effective control of the company. Insiders own HK$7.3b worth of shares in the HK$11b company. That's extraordinary! Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 20% stake in China Lesso Group Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that China Lesso Group Holdings is showing 2 warning signs in our investment analysis , you should know about...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.

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