Star CM Holdings Limited's (HKG:6698) market cap dropped HK$347m last week; Private companies bore the brunt

Key Insights

• Significant control over Star CM Holdings by private companies implies that the general public has more power to influence management and governance-related decisions
• Unionstars Investment Holdings Limited owns 59% of the company
• Insider ownership in Star CM Holdings is 20%

A look at the shareholders of Star CM Holdings Limited (HKG:6698) can tell us which group is most powerful. With 59% stake, private companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 12% decrease in the stock price last week, private companies suffered the most losses, but insiders who own 20% stock also took a hit.

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

View our latest analysis for Star CM Holdings

What Does The Lack Of Institutional Ownership Tell Us About Star CM Holdings?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. Alternatively, there might be something about the company that has kept institutional investors away. Institutional investors may not find the historic growth of the business impressive, or there might be other factors at play. You can see the past revenue performance of Star CM Holdings, for yourself, below.

Hedge funds don't have many shares in Star CM Holdings. The company's largest shareholder is Unionstars Investment Holdings Limited, with ownership of 59%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Ming Tian is the second largest shareholder owning 20% of common stock, and Zhefu Holding Group Co., Ltd. holds about 5.5% of the company stock. Ming Tian, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

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 Star CM Holdings

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.

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.

Our information suggests that insiders maintain a significant holding in Star CM Holdings Limited. Insiders have a HK$511m stake in this HK$2.6b 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 15% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Star CM Holdings. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

Our data indicates that Private Companies hold 59%, 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

We can see that public companies hold 5.5% of the Star CM Holdings shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

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 instance, we've identified 1 warning sign for Star CM Holdings that you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.