Is Xingye Alloy Materials Group Limited's (HKG:505) Shareholder Ownership Skewed Towards Insiders?

If you want to know who really controls Xingye Alloy Materials Group Limited (HKG:505), then you'll have to look at the makeup of its share registry. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

Xingye Alloy Materials Group is a smaller company with a market capitalization of HK$933m, so it may still be flying under the radar of many institutional investors. In the chart below, we can see that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about Xingye Alloy Materials Group.

Check out our latest analysis for Xingye Alloy Materials Group

What Does The Institutional Ownership Tell Us About Xingye Alloy Materials Group?

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 Xingye Alloy Materials Group 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 Xingye Alloy Materials Group's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Xingye Alloy Materials Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Xingye Alloy Materials Group's case, its Top Key Executive, Changyuan Hu, is the largest shareholder, holding 34% of shares outstanding. For context, the second largest shareholder holds about 30% of the shares outstanding, followed by an ownership of 20% by the third-largest shareholder.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 64% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Xingye Alloy Materials Group

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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 Xingye Alloy Materials Group Limited. It has a market capitalization of just HK$933m, and insiders have HK$326m 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

With a 15% ownership, the general public have some degree of sway over Xingye Alloy Materials Group. 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

We can see that Private Companies own 21%, 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. Take risks for example - Xingye Alloy Materials Group has 2 warning signs we think you should be aware of.

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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