Do Insiders Own Shares In Grand Ocean Advanced Resources Company Limited (HKG:65)?

By
Simply Wall St
Published
June 08, 2020
SEHK:65

The big shareholder groups in Grand Ocean Advanced Resources Company Limited (HKG:65) 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.

With a market capitalization of HK$241m, Grand Ocean Advanced Resources is a small cap stock, so it might not be well known by many institutional investors. Taking a look at our data on the ownership groups (below), it's seems that institutions don't own shares in the company. Let's take a closer look to see what the different types of shareholder can tell us about Grand Ocean Advanced Resources.

See our latest analysis for Grand Ocean Advanced Resources

SEHK:65 Ownership Summary June 9th 2020
SEHK:65 Ownership Summary June 9th 2020

What Does The Lack Of Institutional Ownership Tell Us About Grand Ocean Advanced Resources?

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 Grand Ocean Advanced Resources, for yourself, below.

SEHK:65 Income Statement June 9th 2020
SEHK:65 Income Statement June 9th 2020

Hedge funds don't have many shares in Grand Ocean Advanced Resources. Looking at our data, we can see that the largest shareholder is Chang-Deng Liu with 10% of shares outstanding.

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 Grand Ocean Advanced Resources

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 most recent data indicates that insiders own a reasonable proportion of Grand Ocean Advanced Resources Company Limited. Insiders have a HK$25m stake in this HK$241m business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are mostly retail investors, collectively hold 90% of Grand Ocean Advanced Resources shares. This size of ownership gives retail investors collective power. They can and probably do influence decisions on executive compensation, dividend policies and proposed business acquisitions.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Grand Ocean Advanced Resources better, we need to consider many other factors. For example, we've discovered 2 warning signs for Grand Ocean Advanced Resources that you should be aware of before investing here.

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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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. 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. Thank you for reading.

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