Individual investors among Huayi Tencent Entertainment Company Limited's (HKG:419) largest stockholders and were hit after last week's 13% price drop

Key Insights

• Huayi Tencent Entertainment's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 4 shareholders own 43% of the company
• Insiders own 27% of Huayi Tencent Entertainment

If you want to know who really controls Huayi Tencent Entertainment Company Limited (HKG:419), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 57% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

While insiders who own 27% came under pressure after market cap dropped to HK$1.2b last week,individual investors took the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about Huayi Tencent Entertainment.

View our latest analysis for Huayi Tencent Entertainment

What Does The Lack Of Institutional Ownership Tell Us About Huayi Tencent Entertainment?

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 are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Huayi Tencent Entertainment'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.

Hedge funds don't have many shares in Huayi Tencent Entertainment. Our data suggests that Hoi Po Yuen, who is also the company's President, holds the most number of shares at 18%. When an insider holds a sizeable amount of a company's stock, investors consider it as a positive sign because it suggests that insiders are willing to have their wealth tied up in the future of the company. In comparison, the second and third largest shareholders hold about 16% and 9.3% of the stock.

On studying our ownership data, we found that 4 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Huayi Tencent Entertainment

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 a reasonable proportion of Huayi Tencent Entertainment Company Limited. Insiders own HK$330m worth of shares in the HK$1.2b company. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a substantial 57% stake in Huayi Tencent Entertainment, suggesting it is a fairly popular stock. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Public Company Ownership

We can see that public companies hold 16% of the Huayi Tencent Entertainment 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. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Huayi Tencent Entertainment (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.