Do Insiders Own Lots Of Shares In Earthasia International Holdings Limited (HKG:6128)?

Every investor in Earthasia International Holdings Limited (HKG:6128) should be aware of the most powerful shareholder groups. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. 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.

Earthasia International Holdings is not a large company by global standards. It has a market capitalization of HK$1.8b, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutions don't own shares in the company. Let's delve deeper into each type of owner, to discover more about Earthasia International Holdings.

Check out our latest analysis for Earthasia International Holdings

What Does The Lack Of Institutional Ownership Tell Us About Earthasia International Holdings?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Earthasia International Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Earthasia International Holdings is not owned by hedge funds. From our data, we infer that the largest shareholder is Yick Chan (who also holds the title of Senior Key Executive) with 21% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. Meanwhile, the second and third largest shareholders, hold 16% and 11%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Hing Lau is also a Chairman of the Board, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Earthasia International Holdings

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.

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.

It seems insiders own a significant proportion of Earthasia International Holdings Limited. Insiders own HK$772m worth of shares in the HK$1.8b company. 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

The general public, with a 31% stake in the company, will not easily be ignored. 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

Our data indicates that Private Companies hold 10%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

Public companies currently own 16% of Earthasia International Holdings stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Earthasia International Holdings better, we need to consider many other factors. For instance, we've identified 2 warning signs for Earthasia International Holdings (1 is a bit unpleasant) that you should be aware of.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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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