NetDragon Websoft Holdings Limited (HKG:777) Top Key Executive Dejian Liu, the company's largest shareholder sees 6.7%reduction in holdings value

Key Insights

• Significant insider control over NetDragon Websoft Holdings implies vested interests in company growth
• A total of 4 investors have a majority stake in the company with 54% ownership
• Institutional ownership in NetDragon Websoft Holdings is 12%

To get a sense of who is truly in control of NetDragon Websoft Holdings Limited (HKG:777), it is important to understand the ownership structure of the business. The group holding the most number of shares in the company, around 49% to be precise, is individual insiders. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to HK$9.0b last week, insiders would have faced the highest losses than any other shareholder groups of the company.

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

Check out our latest analysis for NetDragon Websoft Holdings

What Does The Institutional Ownership Tell Us About NetDragon Websoft Holdings?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

NetDragon Websoft Holdings 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 NetDragon Websoft Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

NetDragon Websoft Holdings is not owned by hedge funds. From our data, we infer that the largest shareholder is Dejian Liu (who also holds the title of Top Key Executive) with 36% of shares outstanding. Its usually considered a good sign when insiders own a significant number of shares in the company, and in this case, we're glad to see a company insider play the role of a key stakeholder. In comparison, the second and third largest shareholders hold about 7.3% and 6.4% of the stock. Interestingly, the third-largest shareholder, Hui Zheng is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders. In addition, we found that Luyuan Liu, the CEO has 4.0% of the shares allocated to their name.

To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

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 is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of NetDragon Websoft 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. 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.

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.

It seems insiders own a significant proportion of NetDragon Websoft Holdings Limited. It is very interesting to see that insiders have a meaningful HK$4.4b stake in this HK$9.0b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 32% stake in NetDragon Websoft Holdings. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Private Equity Ownership

Private equity firms hold a 7.3% stake in NetDragon Websoft Holdings. This suggests they can be influential in key policy decisions. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with NetDragon Websoft Holdings , and understanding them should be part of your investment process.

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.