CEO Guocai Liu, Migao Group Holdings Limited's (HKG:9879) largest shareholder sees value of holdings go down 16% after recent drop

Key Insights

• Insiders appear to have a vested interest in Migao Group Holdings' growth, as seen by their sizeable ownership
• 74% of the company is held by a single shareholder (Guocai Liu)
• Past performance of a company along with ownership data serve to give a strong idea about prospects for a business

A look at the shareholders of Migao Group Holdings Limited (HKG:9879) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 74% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 16% decline in share price, insiders suffered the most losses.

In the chart below, we zoom in on the different ownership groups of Migao Group Holdings.

Check out our latest analysis for Migao Group Holdings

What Does The Lack Of Institutional Ownership Tell Us About Migao Group Holdings?

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 many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. 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. Migao Group Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Migao Group Holdings is not owned by hedge funds. The company's CEO Guocai Liu is the largest shareholder with 74% of shares outstanding. With such a huge stake, we infer that they have significant control of the future of the company. It's usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider with such skin in the game. Meanwhile, the second largest shareholder is State Street Global Advisors, Inc. holding 0.01%.

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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of Migao Group Holdings

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.

It seems that insiders own more than half the Migao Group Holdings Limited stock. This gives them a lot of power. That means they own HK$3.5b worth of shares in the HK$4.7b company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 26% stake in Migao Group Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for Migao Group Holdings 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. 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.