Dongwu Cement International Limited (HKG:695) insiders have recently purchased stock and their bets paid off last week as company hit HK$1.1b market cap

Key Insights

• Insiders appear to have a vested interest in Dongwu Cement International's growth, as seen by their sizeable ownership
• The largest shareholder of the company is Hok Ming Tseung with a 54% stake
• Recent purchases by insiders

If you want to know who really controls Dongwu Cement International Limited (HKG:695), then you'll have to look at the makeup of its share registry. With 67% stake, individual insiders possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Our data shows that insiders recently bought shares in the company and they were rewarded after market cap rose HK$127m last week.

Let's take a closer look to see what the different types of shareholders can tell us about Dongwu Cement International.

See our latest analysis for Dongwu Cement International

What Does The Lack Of Institutional Ownership Tell Us About Dongwu Cement International?

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 could be various reasons why no institutions own shares in a company. Typically, small, newly listed companies don't attract much attention from fund managers, because it would not be possible for large fund managers to build a meaningful position in the company. Alternatively, there might be something about the company that has kept institutional investors away. Dongwu Cement International might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

We note that hedge funds don't have a meaningful investment in Dongwu Cement International. The company's largest shareholder is Hok Ming Tseung, with ownership of 54%. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 13% and 0.3%, of the shares outstanding, respectively. Dong Liu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

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. 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 Dongwu Cement International

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

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.

It seems that insiders own more than half the Dongwu Cement International Limited stock. This gives them a lot of power. So they have a HK$721m stake in this HK$1.1b 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

With a 33% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Dongwu Cement International. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Dongwu Cement International better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Dongwu Cement International , and understanding them should be part of your investment process.

If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, backed by strong financial data.

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.