Public companies invested in East Buy Holding Limited (HKG:1797) copped the brunt of last week's HK$746m market cap decline

Key Insights

• Significant control over East Buy Holding by public companies implies that the general public has more power to influence management and governance-related decisions
• 57% of the company is held by a single shareholder (New Oriental Education & Technology Group Inc.)
• Institutional ownership in East Buy Holding is 14%

A look at the shareholders of East Buy Holding Limited (HKG:1797) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are public companies with 57% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to HK$13b last week, public companies would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of East Buy Holding, beginning with the chart below.

View our latest analysis for East Buy Holding

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

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

As you can see, institutional investors have a fair amount of stake in East Buy Holding. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of East Buy Holding, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in East Buy Holding. The company's largest shareholder is New Oriental Education & Technology Group Inc., with ownership of 57%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 2.8% and 2.3%, of the shares outstanding, respectively. Minhong Yu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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

Insider Ownership Of East Buy Holding

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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.

We can report that insiders do own shares in East Buy Holding Limited. This is a big company, so it is good to see this level of alignment. Insiders own HK$371m worth of shares (at current prices). Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.

General Public Ownership

With a 26% ownership, the general public, mostly comprising of individual investors, have some degree of sway over East Buy Holding. 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.

Public Company Ownership

We can see that public companies hold 57% of the East Buy Holding shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

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.

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.

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.