Lisi Group (Holdings) Limited's (HKG:526) largest shareholder, Top Key Executive Lixin Li sees holdings value fall by 11% following recent drop

Key Insights

• Insiders appear to have a vested interest in Lisi Group (Holdings)'s growth, as seen by their sizeable ownership
• The top 3 shareholders own 57% of the company
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

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If you want to know who really controls Lisi Group (Holdings) Limited (HKG:526), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual insiders with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to HK$822m last week, insiders would have faced the highest losses than any other shareholder groups of the company.

In the chart below, we zoom in on the different ownership groups of Lisi Group (Holdings).

See our latest analysis for Lisi Group (Holdings)

What Does The Lack Of Institutional Ownership Tell Us About Lisi Group (Holdings)?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

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. Lisi Group (Holdings)'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.

Hedge funds don't have many shares in Lisi Group (Holdings). Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Lisi Group (Holdings)'s case, its Top Key Executive, Lixin Li, is the largest shareholder, holding 31% of shares outstanding. With 16% and 9.0% of the shares outstanding respectively, Weihong Cheng and Alexia David are the second and third largest shareholders.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 57% stake.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Lisi Group (Holdings)

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 the majority of Lisi Group (Holdings) Limited. This means they can collectively make decisions for the company. That means they own HK$466m worth of shares in the HK$822m company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 43% stake in the company, and hence can't 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.

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 - Lisi Group (Holdings) has 2 warning signs we think you should be aware of.

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.

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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.