Could China Maple Leaf Educational Systems Limited’s (HKG:1317) Investor Composition Influence The Stock Price?

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If you want to know who really controls China Maple Leaf Educational Systems Limited (HKG:1317), then you’ll have to look at the makeup of its share registry. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said ‘Show me the incentive and I will show you the outcome.’

With a market capitalization of HK$11b, China Maple Leaf Educational Systems is a decent size, so it is probably on the radar of institutional investors. Taking a look at our data on the ownership groups (below), it’s seems that institutions own shares in the company. We can zoom in on the different ownership groups, to learn more about 1317.

View our latest analysis for China Maple Leaf Educational Systems

SEHK:1317 Ownership Summary, April 30th 2019
SEHK:1317 Ownership Summary, April 30th 2019

What Does The Institutional Ownership Tell Us About China Maple Leaf Educational Systems?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that China Maple Leaf Educational Systems does have institutional investors; and they hold 22% of the stock. 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 China Maple Leaf Educational Systems’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

SEHK:1317 Income Statement, April 30th 2019
SEHK:1317 Income Statement, April 30th 2019

Hedge funds don’t have many shares in China Maple Leaf Educational Systems. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of China Maple Leaf Educational Systems

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.

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.

Our most recent data indicates that insiders own the majority of China Maple Leaf Educational Systems Limited. This means they can collectively make decisions for the company. Given it has a market cap of HK$11b, that means insiders have a whopping HK$5.7b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.

General Public Ownership

With a 28% ownership, the general public have some degree of sway over 1317. 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.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.