Insiders of Lee & Man Paper Manufacturing Limited (HKG:2314) were rewarded after last week’s 4.8% gain

Key Insights

• Insiders appear to have a vested interest in Lee & Man Paper Manufacturing's growth, as seen by their sizeable ownership
• 62% of the business is held by the top 2 shareholders
• Recent purchases by insiders

Every investor in Lee & Man Paper Manufacturing Limited (HKG:2314) should be aware of the most powerful shareholder groups. With 73% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

A quick look at our data suggests that insiders have been buying shares in the company recently and their bets paid off last week after the stock gained 4.8%.

In the chart below, we zoom in on the different ownership groups of Lee & Man Paper Manufacturing.

See our latest analysis for Lee & Man Paper Manufacturing

What Does The Institutional Ownership Tell Us About Lee & Man Paper Manufacturing?

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.

Since institutions own only a small portion of Lee & Man Paper Manufacturing, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. If the company is growing earnings, that may indicate that it is just beginning to catch the attention of these deep-pocketed investors. It is not uncommon to see a big share price rise if multiple institutional investors are trying to buy into a stock at the same time. So check out the historic earnings trajectory, below, but keep in mind it's the future that counts most.

Hedge funds don't have many shares in Lee & Man Paper Manufacturing. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Lee & Man Paper Manufacturing's case, its Top Key Executive, Man Chun Lee, is the largest shareholder, holding 32% of shares outstanding. For context, the second largest shareholder holds about 30% of the shares outstanding, followed by an ownership of 11% by the third-largest shareholder. Interestingly, the second-largest shareholder, Man Bun Lee is also Chief Executive Officer, again, pointing towards strong insider ownership amongst the company's top shareholders.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 62% stake.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Lee & Man Paper Manufacturing

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.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

Our most recent data indicates that insiders own the majority of Lee & Man Paper Manufacturing Limited. This means they can collectively make decisions for the company. That means insiders have a very meaningful HK$7.6b stake in this HK$10b business. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lee & Man Paper Manufacturing. 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should learn about the 2 warning signs we've spotted with Lee & Man Paper Manufacturing (including 1 which makes us a bit uncomfortable) .

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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