Individual investors invested in Meitu, Inc. (HKG:1357) copped the brunt of last week's HK$2.9b market cap decline

Key Insights

• Meitu's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 12 investors have a majority stake in the company with 50% ownership
• Insiders have been selling lately

If you want to know who really controls Meitu, Inc. (HKG:1357), then you'll have to look at the makeup of its share registry. And the group that holds the biggest piece of the pie are individual investors with 47% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

While insiders, who own 36% shares weren’t spared from last week’s HK$2.9b market cap drop, individual investors as a group suffered the maximum losses

Let's delve deeper into each type of owner of Meitu, beginning with the chart below.

See our latest analysis for Meitu

What Does The Institutional Ownership Tell Us About Meitu?

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.

Meitu already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Meitu's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Meitu. Wen Sheng Cai is currently the company's largest shareholder with 24% of shares outstanding. Zeyuan Wu is the second largest shareholder owning 13% of common stock, and China Merchants Fund Management Company Ltd. holds about 3.0% of the company stock. Zeyuan Wu, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A closer look at our ownership figures suggests that the top 12 shareholders have a combined ownership of 50% implying that no single shareholder has a majority.

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 Meitu

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. 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 information suggests that insiders maintain a significant holding in Meitu, Inc.. It has a market capitalization of just HK$13b, and insiders have HK$4.6b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. 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 47% stake in Meitu. 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 Meitu that you should be aware of before investing here.

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.