Public companies invested in Lai Sun Development Company Limited (HKG:488) up 25% last week, insiders too were rewarded

Key Insights

• The considerable ownership by public companies in Lai Sun Development indicates that they collectively have a greater say in management and business strategy
• The largest shareholder of the company is Lai Sun Garment (International) Limited with a 56% stake
• 19% of Lai Sun Development is held by insiders

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

If you want to know who really controls Lai Sun Development Company Limited (HKG:488), then you'll have to look at the makeup of its share registry. With 56% stake, public companies 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.

While public companies were the group that reaped the most benefits after last week’s 25% price gain, insiders also received a 19% cut.

Let's delve deeper into each type of owner of Lai Sun Development, beginning with the chart below.

Check out our latest analysis for Lai Sun Development

What Does The Lack Of Institutional Ownership Tell Us About Lai Sun Development?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. On the other hand, it's always possible that professional investors are avoiding a company because they don't think it's the best place for their money. Lai Sun Development's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

Lai Sun Development is not owned by hedge funds. Lai Sun Garment (International) Limited is currently the largest shareholder, with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. The second and third largest shareholders are Siu Yuk Yu and Cheuk Yi Yu, with an equal amount of shares to their name at 9.5%.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Lai Sun Development

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.

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 Lai Sun Development Company Limited. It has a market capitalization of just HK$959m, and insiders have HK$184m 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

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Lai Sun Development. 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 Company Ownership

We can see that Private Companies own 11%, of the shares on issue. 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 56% of the Lai Sun Development shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Lai Sun Development better, we need to consider many other factors. Be aware that Lai Sun Development is showing 2 warning signs in our investment analysis , you should know about...

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.