7Road Holdings Limited's (HKG:797) largest shareholder, Top Key Executive Shuqi Meng sees holdings value fall by 13% following recent drop

Key Insights

• Insiders appear to have a vested interest in 7Road Holdings' growth, as seen by their sizeable ownership
• The top 4 shareholders own 54% of the company
• Institutions own 13% of 7Road Holdings

A look at the shareholders of 7Road Holdings Limited (HKG:797) can tell us which group is most powerful. We can see that individual insiders own the lion's share in the company with 41% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 13% decline in share price, insiders suffered the most losses.

Let's delve deeper into each type of owner of 7Road Holdings, beginning with the chart below.

See our latest analysis for 7Road Holdings

What Does The Institutional Ownership Tell Us About 7Road Holdings?

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.

As you can see, institutional investors have a fair amount of stake in 7Road Holdings. 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. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of 7Road Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in 7Road Holdings. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In 7Road Holdings' case, its Top Key Executive, Shuqi Meng, is the largest shareholder, holding 19% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 15% and 13%, of the shares outstanding, respectively.

Our research also brought to light the fact that roughly 54% 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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of 7Road Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

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 most recent data indicates that insiders own a reasonable proportion of 7Road Holdings Limited. It has a market capitalization of just HK$5.5b, and insiders have HK$2.3b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 30% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Private Equity Ownership

With a stake of 6.3%, private equity firms could influence the 7Road Holdings board. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere.

Private Company Ownership

It seems that Private Companies own 5.1%, of the 7Road Holdings stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 4.9% of the 7Road Holdings shares on issue. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.

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.

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