After the recent decline, Chen Lin Education Group Holdings Limited (HKG:1593) CEO Yulin Huang's holdings have lost 16% of their value

Key Insights

• Significant insider control over Chen Lin Education Group Holdings implies vested interests in company growth
• Yulin Huang owns 57% of the company
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

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Every investor in Chen Lin Education Group Holdings Limited (HKG:1593) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 59% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And last week, insiders endured the biggest losses as the stock fell by 16%.

Let's delve deeper into each type of owner of Chen Lin Education Group Holdings, beginning with the chart below.

View our latest analysis for Chen Lin Education Group Holdings

What Does The Lack Of Institutional Ownership Tell Us About Chen Lin Education Group 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 could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Chen Lin Education Group Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Hedge funds don't have many shares in Chen Lin Education Group Holdings. The company's CEO Yulin Huang is the largest shareholder with 57% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. Li Wang is the second largest shareholder owning 2.4% of common stock, and Dimensional Fund Advisors LP holds about 0.2% of the company stock. Interestingly, the second-largest shareholder, Li Wang is also Co-President, again, pointing towards strong insider ownership amongst the company's top shareholders.

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 Chen Lin Education Group Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 information suggests that insiders own more than half of Chen Lin Education Group Holdings Limited. This gives them effective control of the company. That means they own HK$883m worth of shares in the HK$1.5b 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

With a 41% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Chen Lin Education Group Holdings. 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. For example, we've discovered 3 warning signs for Chen Lin Education Group Holdings (2 are concerning!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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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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.