Joy Spreader Group Inc.'s (HKG:6988) market cap up HK$398m last week, benefiting both retail investors who own 55% as well as insiders

Key Insights

• Joy Spreader Group's significant retail investors ownership suggests that the key decisions are influenced by shareholders from the larger public
• The top 11 shareholders own 45% of the company
• 37% of Joy Spreader Group is held by insiders

To get a sense of who is truly in control of Joy Spreader Group Inc. (HKG:6988), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 55% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Following a 98% increase in the stock price last week, retail investors profited the most, but insiders who own 37% stock also stood to gain from the increase.

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

Check out our latest analysis for Joy Spreader Group

What Does The Institutional Ownership Tell Us About Joy Spreader Group?

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.

Joy Spreader Group already has institutions on the share registry. Indeed, they own a respectable stake in the company. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 Joy Spreader Group's historic earnings and revenue below, but keep in mind there's always more to the story.

Joy Spreader Group is not owned by hedge funds. The company's CEO Zinan Zhu is the largest shareholder with 32% of shares outstanding. In comparison, the second and third largest shareholders hold about 4.8% and 4.4% of the stock.

Our studies suggest that the top 11 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of Joy Spreader Group

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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Joy Spreader Group Inc.. It has a market capitalization of just HK$806m, and insiders have HK$294m worth of shares in their own names. We would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public -- including retail investors -- own 55% of Joy Spreader Group. 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Joy Spreader Group (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.