Is Kidztech Holdings Limited's (HKG:6918) Shareholder Ownership Skewed Towards Insiders?

By
Simply Wall St
Published
May 27, 2021
SEHK:6918
Source: Shutterstock

A look at the shareholders of Kidztech Holdings Limited (HKG:6918) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Kidztech Holdings is a smaller company with a market capitalization of HK$823m, so it may still be flying under the radar of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions are not on the share registry. Let's delve deeper into each type of owner, to discover more about Kidztech Holdings.

View our latest analysis for Kidztech Holdings

ownership-breakdown
SEHK:6918 Ownership Breakdown May 28th 2021

What Does The Lack Of Institutional Ownership Tell Us About Kidztech 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. Alternatively, there might be something about the company that has kept institutional investors away. 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 Kidztech Holdings, for yourself, below.

earnings-and-revenue-growth
SEHK:6918 Earnings and Revenue Growth May 28th 2021

Hedge funds don't have many shares in Kidztech Holdings. The company's CEO Huang Yu is the largest shareholder with 40% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 11% and 6.9%, of the shares outstanding, respectively. Interestingly, the third-largest shareholder, Jingyun Zheng is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Kidztech Holdings

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.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our information suggests that insiders own more than half of Kidztech Holdings Limited. This gives them effective control of the company. Given it has a market cap of HK$823m, that means they have HK$505m worth of shares. 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, with a 39% stake in the company, will not easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Kidztech Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Kidztech Holdings (of which 2 are potentially serious!) you should know about.

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.

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