XD Inc.'s (HKG:2400) most bullish insider is CEO Yimeng Huang, and their holdings value went up by 11% last week

Key Insights

• XD's significant insider ownership suggests inherent interests in company's expansion
• 50% of the business is held by the top 4 shareholders
• Institutions own 14% of XD

A look at the shareholders of XD Inc. (HKG:2400) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 46% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by HK$737m last week.

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

See our latest analysis for XD

What Does The Institutional Ownership Tell Us About XD?

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.

XD already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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 XD's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in XD. With a 34% stake, CEO Yimeng Huang is the largest shareholder. In comparison, the second and third largest shareholders hold about 11% and 2.2% of the stock. Interestingly, the second-largest shareholder, Yunjie Dai is also President, again, pointing towards strong insider ownership amongst the company's top shareholders.

Our research also brought to light the fact that roughly 50% of the company is controlled by the top 4 shareholders suggesting that these owners wield significant influence on the business.

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. 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 XD

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 insiders own a significant proportion of XD Inc.. Insiders have a HK$3.3b stake in this HK$7.3b business. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

With a 39% ownership, the general public, mostly comprising of individual investors, have some degree of sway over XD. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand XD better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for XD you should be aware of.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter 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.