Hengtai Securities Co., Ltd.'s (HKG:1476) 9.7% loss last week hit both individual investors who own 46% as well as institutions

Key Insights

• The considerable ownership by private companies in Hengtai Securities indicates that they collectively have a greater say in management and business strategy
• 59% of the business is held by the top 3 shareholders
• Institutions own 24% of Hengtai Securities

Every investor in Hengtai Securities Co., Ltd. (HKG:1476) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 46% to be precise, is private companies. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Following a 9.7% decrease in the stock price last week, private companies suffered the most losses, but institutions who own 24% stock also took a hit.

Let's delve deeper into each type of owner of Hengtai Securities, beginning with the chart below.

See our latest analysis for Hengtai Securities

What Does The Institutional Ownership Tell Us About Hengtai Securities?

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.

Hengtai Securities already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Hengtai Securities' earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Hengtai Securities. Beijing Financial Street Investment Group Co., Ltd. is currently the company's largest shareholder with 30% of shares outstanding. For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 12% by the third-largest shareholder.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 59% stake.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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 Hengtai Securities

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 data cannot confirm that board members are holding shares personally. It is rare to see such a low level of personal ownership, amongst the board (and it is possible that our data might be incomplete). Concerned investors should check here to see if insiders have been selling or buying.

General Public Ownership

The general public-- including retail investors -- own 18% 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.

Private Company Ownership

We can see that Private Companies own 46%, of the shares on issue. 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.

Public Company Ownership

We can see that public companies hold 12% of the Hengtai Securities 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:

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. Be aware that Hengtai Securities is showing 2 warning signs in our investment analysis , and 1 of those is a bit unpleasant...

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.

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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.