iDreamSky Technology Holdings Limited's (HKG:1119) stock price dropped 20% last week; individual investors would not be happy

Key Insights

• iDreamSky Technology Holdings' significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 23 investors have a majority stake in the company with 46% ownership
• Insider ownership in iDreamSky Technology Holdings is 18%

To get a sense of who is truly in control of iDreamSky Technology Holdings Limited (HKG:1119), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 54% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).

While the holdings of individual investors took a hit after last week’s 20% price drop, insiders with their 18% also suffered.

In the chart below, we zoom in on the different ownership groups of iDreamSky Technology Holdings.

Check out our latest analysis for iDreamSky Technology Holdings

What Does The Institutional Ownership Tell Us About iDreamSky Technology Holdings?

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 iDreamSky Technology Holdings 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. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see iDreamSky Technology Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in iDreamSky Technology Holdings. Looking at our data, we can see that the largest shareholder is the CEO Xiangyu Chen with 16% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 6.6%, of the shares outstanding, respectively.

A deeper look at our ownership data shows that the top 23 shareholders collectively hold less than half of the register, suggesting a large group of small holders where no single shareholder has a majority.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of iDreamSky Technology Holdings

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 insiders own a significant proportion of iDreamSky Technology Holdings Limited. It has a market capitalization of just HK$3.5b, and insiders have HK$641m worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, mostly comprising of individual investors, collectively holds 54% of iDreamSky Technology Holdings shares. This level of ownership gives investors from the wider public some power to sway key policy decisions such as board composition, executive compensation, and the dividend payout ratio.

Private Company Ownership

Our data indicates that Private Companies hold 6.6%, of the company's shares. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Public Company Ownership

Public companies currently own 15% of iDreamSky Technology Holdings stock. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for iDreamSky Technology Holdings (of which 1 makes us a bit uncomfortable!) you should know about.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.