Private companies are Hanhua Financial Holding Co., Ltd.'s (HKG:3903) biggest owners and were rewarded after market cap rose by HK$83m last week

Key Insights

• The considerable ownership by private companies in Hanhua Financial Holding indicates that they collectively have a greater say in management and business strategy
• 51% of the business is held by the top 8 shareholders
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

Every investor in Hanhua Financial Holding Co., Ltd. (HKG:3903) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are private companies with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies were the biggest beneficiaries of last week’s 11% gain.

Let's delve deeper into each type of owner of Hanhua Financial Holding, beginning with the chart below.

View our latest analysis for Hanhua Financial Holding

What Does The Lack Of Institutional Ownership Tell Us About Hanhua Financial Holding?

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

There are many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. 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 Hanhua Financial Holding, for yourself, below.

We note that hedge funds don't have a meaningful investment in Hanhua Financial Holding. Chongqing Huitai Investment Co. Ltd is currently the company's largest shareholder with 9.8% of shares outstanding. Loncin Holdings Co., Ltd. is the second largest shareholder owning 9.4% of common stock, and Chengdu Shunrunze Enterprise Management Consulting Co., Ltd. holds about 6.1% of the company stock.

On further inspection, we found that more than half the company's shares are owned by the top 8 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones.

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

Insider Ownership Of Hanhua Financial Holding

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.

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.

Shareholders would probably be interested to learn that insiders own shares in Hanhua Financial Holding Co., Ltd.. As individuals, the insiders collectively own HK$60m worth of the HK$814m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

With a 40% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Hanhua Financial 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

It seems that Private Companies own 53%, of the Hanhua Financial Holding stock. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Hanhua Financial Holding (of which 1 is a bit concerning!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.