Private companies invested in TK Group (Holdings) Limited (HKG:2283) up 18% last week, insiders too were rewarded

Key Insights

• The considerable ownership by private companies in TK Group (Holdings) indicates that they collectively have a greater say in management and business strategy
• 55% of the business is held by the top 2 shareholders
• 24% of TK Group (Holdings) is held by insiders

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To get a sense of who is truly in control of TK Group (Holdings) Limited (HKG:2283), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 44% to be precise, is private companies. Put another way, the group faces the maximum upside potential (or downside risk).

While private companies were the group that benefitted the most from last week’s HK$333m market cap gain, insiders too had a 24% share in those profits.

Let's take a closer look to see what the different types of shareholders can tell us about TK Group (Holdings).

View our latest analysis for TK Group (Holdings)

What Does The Institutional Ownership Tell Us About TK Group (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.

As you can see, institutional investors have a fair amount of stake in TK Group (Holdings). 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 TK Group (Holdings)'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 TK Group (Holdings). Eastern Mix Company Limited is currently the largest shareholder, with 44% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 10.0%, of the shares outstanding, respectively. Pui Leung Li, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Additionally, the company's CEO Kin Cheung Yung directly holds 6.7% of the total shares outstanding.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 TK 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.

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 a reasonable proportion of TK Group (Holdings) Limited. It has a market capitalization of just HK$2.1b, and insiders have HK$513m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over TK Group (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 44%, 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with TK Group (Holdings) .

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.

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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.