While institutions invested in Hengtai Securities Co., Ltd. (HKG:1476) benefited from last week's 9.5% gain, private companies stood to gain the most

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
• Institutional ownership in Hengtai Securities is 23%

Every investor in Hengtai Securities Co., Ltd. (HKG:1476) should be aware of the most powerful shareholder groups. With 46% stake, private companies 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.

Following a 9.5% increase in the stock price last week, private companies profited the most, but institutions who own 23% stock also stood to gain from the increase.

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

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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Hengtai Securities, (below). Of course, keep in mind that there are other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Hengtai Securities. Beijing Financial Street Investment Group Co., Ltd. is currently the largest shareholder, with 30% of shares outstanding. With 17% and 12% of the shares outstanding respectively, TianFeng Securities Co., Ltd., Asset Management Arm and Baotou Huazi Industry Co., Ltd are the second and third largest shareholders.

After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.

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. 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 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.

We note our data does not show any board members holding shares, personally. We do not see this low level of ownership often, and it is possible our data is imperfect. But shareholders can click here to check if insiders have been selling stock.

General Public Ownership

With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hengtai Securities. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

It seems that Private Companies own 46%, of the Hengtai Securities 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

Public companies currently own 12% of Hengtai Securities stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hengtai Securities better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Hengtai Securities 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.

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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