Despite recent sales, Longfor Group Holdings Limited (HKG:960) insiders own 53% shares but recent downturn may have set them back

Key Insights

• Significant insider control over Longfor Group Holdings implies vested interests in company growth
• 65% of the business is held by the top 2 shareholders
• Recent sales by insiders

To get a sense of who is truly in control of Longfor Group Holdings Limited (HKG:960), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are individual insiders with 53% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And our data suggests that insiders own the top position in the company’s share registry despite recent sales. As market cap fell to HK$83b last week, they would have faced the highest losses than any other shareholder groups of the company.

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

See our latest analysis for Longfor Group Holdings

What Does The Institutional Ownership Tell Us About Longfor Group Holdings?

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.

Longfor Group Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. 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 Longfor Group Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in Longfor Group Holdings. Our data shows that Yajun Wu is the largest shareholder with 44% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 20% and 8.0%, of the shares outstanding, respectively.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 65% stake.

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 are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Longfor Group 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. 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.

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 that insiders own more than half the Longfor Group Holdings Limited stock. This gives them a lot of power. Given it has a market cap of HK$83b, that means insiders have a whopping HK$44b worth of shares in their own names. It is good to see this level of investment. You can check here to see if those insiders have been selling any of their shares.

General Public Ownership

The general public, who are usually individual investors, hold a 15% stake in Longfor Group Holdings. 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

It seems that Private Companies own 20%, of the Longfor Group 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.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 4 warning signs with Longfor Group Holdings (at least 1 which shouldn't be ignored) , 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.