Do Directors Own Central Wealth Group Holdings Limited (HKG:139) Shares?

By
Simply Wall St
Published
January 15, 2020
SEHK:139

A look at the shareholders of Central Wealth Group Holdings Limited (HKG:139) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. I quite like to see at least a little bit of insider ownership. As Charlie Munger said 'Show me the incentive and I will show you the outcome.

Central Wealth Group Holdings is a smaller company with a market capitalization of HK$751m, so it may still be flying under the radar of many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions don't own many shares in the company. Let's delve deeper into each type of owner, to discover more about Central Wealth Group Holdings.

View our latest analysis for Central Wealth Group Holdings

SEHK:139 Ownership Summary, January 15th 2020
SEHK:139 Ownership Summary, January 15th 2020

What Does The Lack Of Institutional Ownership Tell Us About Central Wealth Group Holdings?

Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.

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. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Central Wealth Group Holdings, for yourself, below.

SEHK:139 Income Statement, January 15th 2020
SEHK:139 Income Statement, January 15th 2020

Central Wealth Group Holdings is not owned by hedge funds. Xiangru Chen is currently the company's largest shareholder with 14% of shares outstanding. Next, we have Dragon Regal Holdings Limited and Ke Xu as the second and third largest shareholders, holding 14% and 7.6%, of the shares outstanding, respectively. Ke Xu also happens to hold the title of Member of the Board of Directors.

On studying our ownership data, we found that 10 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Central Wealth Group Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 maintain a significant holding in Central Wealth Group Holdings Limited. Insiders own HK$163m worth of shares in the HK$751m company. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly retail investors, hold a substantial 57% stake in 139, suggesting it is a fairly popular stock. With this size of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to decline an acquisition or merger that may not improve profitability.

Private Company Ownership

It seems that Private Companies own 14%, of the 139 stock. 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.

Public Company Ownership

We can see that public companies hold 7.3%, of the 139 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 risks, for instance. Every company has them, and we've spotted 4 warning signs for Central Wealth Group Holdings you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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