Can We See Significant Insider Ownership On The Telecom Service One Holdings Limited (HKG:3997) Share Register?

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A look at the shareholders of Telecom Service One Holdings Limited (HKG:3997) can tell us which group is most powerful. Institutions often own shares in more established companies, while it’s not unusual to see insiders own a fair bit of smaller companies. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

Telecom Service One Holdings is a smaller company with a market capitalization of HK$364m, so it may still be flying under the radar of many institutional investors. In the chart below below, we can see that institutions are not on the share registry. We can zoom in on the different ownership groups, to learn more about 3997.

See our latest analysis for Telecom Service One Holdings

SEHK:3997 Ownership Summary February 4th 19
SEHK:3997 Ownership Summary February 4th 19

What Does The Lack Of Institutional Ownership Tell Us About Telecom Service One 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 are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Telecom Service One Holdings, for yourself, below.

SEHK:3997 Income Statement Export February 4th 19
SEHK:3997 Income Statement Export February 4th 19

Hedge funds don’t have many shares in Telecom Service One Holdings. As far I can tell there isn’t analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Telecom Service One 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own a reasonable proportion of Telecom Service One Holdings Limited. Insiders own HK$75m worth of shares in the HK$364m company. 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 holds a 28% stake in 3997. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 51%, of the 3997 stock. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it’s hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It’s always worth thinking about the different groups who own shares in a company. But to understand Telecom Service One Holdings better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.