Insiders were the key beneficiaries as The Hongkong and Shanghai Hotels, Limited's (HKG:45) market cap rises to HK$10b

Key Insights

• Hongkong and Shanghai Hotels' significant insider ownership suggests inherent interests in company's expansion
• The largest shareholder of the company is Michael David Kadoorie with a 52% stake
• 17% of Hongkong and Shanghai Hotels is held by Institutions

To get a sense of who is truly in control of The Hongkong and Shanghai Hotels, Limited (HKG:45), it is important to understand the ownership structure of the business. With 57% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit HK$10b market cap following a 4.3% gain in the stock.

Let's take a closer look to see what the different types of shareholders can tell us about Hongkong and Shanghai Hotels.

See our latest analysis for Hongkong and Shanghai Hotels

What Does The Institutional Ownership Tell Us About Hongkong and Shanghai Hotels?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Hongkong and Shanghai Hotels already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Hongkong and Shanghai Hotels' historic earnings and revenue below, but keep in mind there's always more to the story.

We note that hedge funds don't have a meaningful investment in Hongkong and Shanghai Hotels. Looking at our data, we can see that the largest shareholder is Michael David Kadoorie with 52% of shares outstanding. With such a huge stake in the ownership, we infer that they have significant control of the future of the company. For context, the second largest shareholder holds about 16% of the shares outstanding, followed by an ownership of 5.1% by the third-largest shareholder. Ronald James McAulay, who is the third-largest shareholder, also happens to hold the title of Chairman Emeritus.

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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Hongkong and Shanghai Hotels

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

It seems that insiders own more than half the The Hongkong and Shanghai Hotels, Limited stock. This gives them a lot of power. That means insiders have a very meaningful HK$5.7b stake in this HK$10b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public-- including retail investors -- own 21% 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 5.1% of the Hongkong and Shanghai Hotels shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hongkong and Shanghai Hotels better, we need to consider many other factors. For example, we've discovered 1 warning sign for Hongkong and Shanghai Hotels that you should be aware of before investing here.

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.