The big shareholder groups in China Shandong Hi-Speed Financial Group Limited (HKG:412) have power over the company. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.
China Shandong Hi-Speed Financial Group has a market capitalization of HK$12b, so we would expect some institutional investors to have noticed the stock. In the chart below, we can see that institutions don't own shares in the company. We can zoom in on the different ownership groups, to learn more about China Shandong Hi-Speed Financial Group.
What Does The Lack Of Institutional Ownership Tell Us About China Shandong Hi-Speed Financial Group?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at 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 China Shandong Hi-Speed Financial Group, for yourself, below.
China Shandong Hi-Speed Financial Group is not owned by hedge funds. Shandong Hi-Speed Group Co.,Ltd is currently the largest shareholder, with 43% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.2% and 1.6% of the stock.
Our research also brought to light the fact that roughly 51% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 China Shandong Hi-Speed Financial Group
The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.
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.
Our most recent data indicates that insiders own some shares in China Shandong Hi-Speed Financial Group Limited. The insiders have a meaningful stake worth HK$821m. Most would see this as a real positive. Most would say this shows alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public collectively holds 52% of China Shandong Hi-Speed Financial Group shares. This size of ownership gives investors from the general public some collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.
Private Company Ownership
It seems that Private Companies own 45%, of the China Shandong Hi-Speed Financial Group 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.
While it is well worth considering the different groups that own a company, there are other factors that are even more important. For instance, we've identified 2 warning signs for China Shandong Hi-Speed Financial Group (1 is significant) that you should be aware of.
Of course this may not be the best stock to buy. So take a peek at this free 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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