East Buy Holding Limited's (HKG:1797) market cap dropped HK$886m last week; Public companies bore the brunt

Key Insights

• The considerable ownership by public companies in East Buy Holding indicates that they collectively have a greater say in management and business strategy
• New Oriental Education & Technology Group Inc. owns 57% of the company
• 16% of East Buy Holding is held by Institutions

If you want to know who really controls East Buy Holding Limited (HKG:1797), then you'll have to look at the makeup of its share registry. We can see that public companies own the lion's share in the company with 57% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

As market cap fell to HK$19b last week, public companies 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 East Buy Holding.

Check out our latest analysis for East Buy Holding

What Does The Institutional Ownership Tell Us About East Buy Holding?

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.

East Buy Holding already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 East Buy Holding's historic earnings and revenue below, but keep in mind there's always more to the story.

East Buy Holding is not owned by hedge funds. Looking at our data, we can see that the largest shareholder is New Oriental Education & Technology Group Inc. with 57% of shares outstanding. This implies that they have majority interest control of the future of the company. For context, the second largest shareholder holds about 4.7% of the shares outstanding, followed by an ownership of 2.8% by the third-largest shareholder. Two of the top three shareholders happen to be Chief Financial Officer and Chairman of the Board, respectively. That is, insiders feature higher up in the heirarchy of the company's top shareholders.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of East Buy Holding

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. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

We can report that insiders do own shares in East Buy Holding Limited. It is a pretty big company, so it is generally a positive to see some potentially meaningful alignment. In this case, they own around HK$1.5b worth of shares (at current prices). It is good to see this level of investment by insiders. You can check here to see if those insiders have been buying recently.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over East Buy Holding. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

Public companies currently own 57% of East Buy Holding 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for East Buy Holding you should know about.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.