Haidilao International Holding Ltd. (HKG:6862) insiders have significant skin in the game with 40% ownership

Key Insights

• Haidilao International Holding's significant insider ownership suggests inherent interests in company's expansion
• 53% of the business is held by the top 2 shareholders
• Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock

A look at the shareholders of Haidilao International Holding Ltd. (HKG:6862) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 40% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

So, insiders of Haidilao International Holding have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.

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

See our latest analysis for Haidilao International Holding

What Does The Institutional Ownership Tell Us About Haidilao International 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.

As you can see, institutional investors have a fair amount of stake in Haidilao International Holding. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 Haidilao International Holding's 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 Haidilao International Holding. The company's largest shareholder is Np United Holding Ltd, with ownership of 32%. Meanwhile, the second and third largest shareholders, hold 21% and 9.5%, of the shares outstanding, respectively. Yong Zhang, who is the second-largest shareholder, also happens to hold the title of Top Key Executive.

After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Haidilao International 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.

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.

Our most recent data indicates that insiders own a reasonable proportion of Haidilao International Holding Ltd.. Insiders own HK$31b worth of shares in the HK$78b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 19% stake in Haidilao International Holding. 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.

Private Company Ownership

Our data indicates that Private Companies hold 32%, of the company's shares. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

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

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com