Newborn Town Inc.'s (HKG:9911): Top Key Executive Chunhe Liu is the most bullish insider, and their stock value gained 16% last week

Key Insights

• Insiders appear to have a vested interest in Newborn Town's growth, as seen by their sizeable ownership
• The top 5 shareholders own 53% of the company
• 11% of Newborn Town is held by Institutions

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A look at the shareholders of Newborn Town Inc. (HKG:9911) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are individual insiders with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

Clearly, insiders benefitted the most after the company's market cap rose by HK$2.0b last week.

In the chart below, we zoom in on the different ownership groups of Newborn Town.

View our latest analysis for Newborn Town

What Does The Institutional Ownership Tell Us About Newborn Town?

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.

We can see that Newborn Town does have institutional investors; and they hold a good portion of the company's stock. 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 Newborn Town's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Newborn Town. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Newborn Town's case, its Top Key Executive, Chunhe Liu, is the largest shareholder, holding 18% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 9.4% of the stock. Additionally, the company's CEO Ping Li directly holds 5.5% of the total shares outstanding.

To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Newborn Town

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.

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 most recent data indicates that insiders own a reasonable proportion of Newborn Town Inc.. Insiders own HK$4.7b worth of shares in the HK$14b company. That's quite meaningful. 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 31% stake in Newborn Town. 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

It seems that Private Companies own 24%, of the Newborn Town stock. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Newborn Town better, we need to consider many other factors. For example, we've discovered 2 warning signs for Newborn Town that you should be aware of before investing here.

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.