Senior Key Executive Lin Chit Hui, Hengan International Group Company Limited's (HKG:1044) largest shareholder sees value of holdings go down 5.5% after recent drop

A look at the shareholders of Hengan International Group Company Limited (HKG:1044) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 45% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 5.5% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Hengan International Group.

Check out the opportunities and risks within the HK Personal Products industry.

What Does The Institutional Ownership Tell Us About Hengan International Group?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

We can see that Hengan International Group does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Hengan International Group's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Hengan International Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Hengan International Group's case, its Senior Key Executive, Lin Chit Hui, is the largest shareholder, holding 23% of shares outstanding. Man Bok Sze is the second largest shareholder owning 21% of common stock, and Artisan Partners Limited Partnership holds about 6.0% of the company stock. Interestingly, the second-largest shareholder, Man Bok Sze is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Hengan International 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.

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 Hengan International Group Company Limited. It is very interesting to see that insiders have a meaningful HK$17b stake in this HK$38b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 28% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Hengan International Group better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Hengan International Group .

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.