Insiders of Skyworth Group Limited (HKG:751) must be disappointed as stock fell 6.0% after recent purchases

Key Insights

• Skyworth Group's significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Wang Wong with a 53% stake
• Insiders have bought recently

Every investor in Skyworth Group Limited (HKG:751) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 55% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

A quick look at our data suggests that insiders have been buying shares in the company recently. However, with market cap down by HK$453m over the last week, their expectations were far from met.

In the chart below, we zoom in on the different ownership groups of Skyworth Group.

View our latest analysis for Skyworth Group

What Does The Institutional Ownership Tell Us About Skyworth Group?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Skyworth Group. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Skyworth Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Skyworth Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Skyworth Group's case, its Top Key Executive, Wang Wong, is the largest shareholder, holding 53% of shares outstanding. With 2.2% and 1.7% of the shares outstanding respectively, The Vanguard Group, Inc. and Dimensional Fund Advisors LP are the second and third largest shareholders. In addition, we found that Chi Shi, the CEO has 1.4% of the shares allocated to their name.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Skyworth Group

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.

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 Skyworth Group Limited. This gives them effective control of the company. That means they own HK$3.6b worth of shares in the HK$6.6b 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, who are usually individual investors, hold a 37% stake in Skyworth Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

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.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.