With a 45% stake, NetEase, Inc. (HKG:9999) insiders have a lot riding on the company

Key Insights

• Significant insider control over NetEase implies vested interests in company growth
• 51% of the business is held by the top 3 shareholders
• Institutional ownership in NetEase is 33%

A look at the shareholders of NetEase, Inc. (HKG:9999) can tell us which group is most powerful. With 45% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

So, insiders of NetEase have a lot at stake and every decision they make on the company’s future is important to them from a financial point of view.

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

Check out our latest analysis for NetEase

What Does The Institutional Ownership Tell Us About NetEase?

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.

NetEase already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 NetEase, (below). Of course, keep in mind that there are other factors to consider, too.

Hedge funds don't have many shares in NetEase. The company's CEO Lei Ding is the largest shareholder with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 3.1% and 2.9%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of NetEase

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.

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.

It seems insiders own a significant proportion of NetEase, Inc.. It is very interesting to see that insiders have a meaningful HK$233b stake in this HK$519b business. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 22% ownership, the general public, mostly comprising of individual investors, have some degree of sway over NetEase. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand NetEase better, we need to consider many other factors.

Many find it useful to take an in depth look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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.