Do Insiders Own Lots Of Shares In Yangtzekiang Garment Limited (HKG:294)?

Every investor in Yangtzekiang Garment Limited (HKG:294) 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.

Yangtzekiang Garment is a smaller company with a market capitalization of HK$668m, 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. Let’s take a closer look to see what the different types of shareholder can tell us about 294.

See our latest analysis for Yangtzekiang Garment

SEHK:294 Ownership Summary, March 28th 2019
SEHK:294 Ownership Summary, March 28th 2019

What Does The Lack Of Institutional Ownership Tell Us About Yangtzekiang Garment?

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 could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don’t attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. It is also possible that fund managers don’t own the stock because they aren’t convinced it will perform well. Yangtzekiang Garment’s earnings and revenue track record (below) may not be compelling to institutional investors — or they simply might not have looked at the business closely.

SEHK:294 Income Statement, March 28th 2019
SEHK:294 Income Statement, March 28th 2019

We note that hedge funds don’t have a meaningful investment in Yangtzekiang Garment. Our information suggests that there isn’t any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Yangtzekiang Garment

The definition of company insiders can be subjective, and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 Yangtzekiang Garment Limited. Insiders have a HK$152m stake in this HK$668m business. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public — mostly retail investors — own 62% of Yangtzekiang Garment . This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Private Company Ownership

It seems that Private Companies own 15%, of the 294 stock. 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:

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

I always like to check for a history of revenue growth. You can too, by accessing this free chart of historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. So take a peek at this free 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.