Despite recent sales, China Beststudy Education Group (HKG:3978) insiders remain the largest stockholders with 80% ownership

Key Insights

• Insiders appear to have a vested interest in China Beststudy Education Group's growth, as seen by their sizeable ownership
• A total of 3 investors have a majority stake in the company with 62% ownership
• Insiders have been selling lately

A look at the shareholders of China Beststudy Education Group (HKG:3978) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 80% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Insiders own the top position in the company’s share registry despite recent sales and as a result, were the biggest beneficiaries of last week’s 13% gain.

Let's take a closer look to see what the different types of shareholders can tell us about China Beststudy Education Group.

See our latest analysis for China Beststudy Education Group

What Does The Lack Of Institutional Ownership Tell Us About China Beststudy Education Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. China Beststudy Education Group's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in China Beststudy Education Group. The company's CEO Junjing Tang is the largest shareholder with 23% of shares outstanding. The second and third largest shareholders are Junying Tang and Gui Zhou, with an equal amount of shares to their name at 19%. Note that two of the top three shareholders are also Top Key Executive and Member of the Board of Directors, respectively, once again pointing to significant ownership by company insiders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of China Beststudy Education Group

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.

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.

Our information suggests that insiders own more than half of China Beststudy Education Group. This gives them effective control of the company. That means they own HK$1.8b worth of shares in the HK$2.3b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish todiscover (for free) if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in China Beststudy Education Group. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 5.6%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - China Beststudy Education Group has 2 warning signs (and 1 which is significant) we think you should know about.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.