East Buy Holding Limited's (HKG:1797) stock price dropped 6.0% last week; public companies would not be happy

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
• The largest shareholder of the company is New Oriental Education & Technology Group Inc. with a 55% stake
• 11% of East Buy Holding is held by Institutions

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. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 6.0% decline in share price, public companies suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about East Buy Holding.

View our latest analysis for East Buy Holding

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

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 East Buy Holding does have institutional investors; and they hold a good portion of the company's stock. 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 55%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 2.7% and 1.6%, of the shares outstanding, respectively.

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

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. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

We can see that insiders 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$702m worth of shares (at current prices). If you would like to explore the question of insider alignment, you can click here to see if insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. To that end, you should learn about the 3 warning signs we've spotted with East Buy Holding (including 1 which is significant) .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.