China Merchants Land Limited (HKG:978) institutional owners may be pleased with recent gains after 35% loss over the past year

Key Insights

• Institutions' substantial holdings in China Merchants Land implies that they have significant influence over the company's share price
• The largest shareholder of the company is Eureka Investment Co., Ltd. with a 74% stake
• Using data from company's past performance alongside ownership research, one can better assess the future performance of a company

A look at the shareholders of China Merchants Land Limited (HKG:978) can tell us which group is most powerful. With 75% stake, institutions 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.

Last week's HK$108m market cap gain would probably be appreciated by institutional investors, especially after a year of 35% losses.

In the chart below, we zoom in on the different ownership groups of China Merchants Land.

Check out our latest analysis for China Merchants Land

What Does The Institutional Ownership Tell Us About China Merchants Land?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in China Merchants Land. 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. 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 China Merchants Land's historic earnings and revenue below, but keep in mind there's always more to the story.

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in China Merchants Land. Eureka Investment Co., Ltd. is currently the company's largest shareholder with 74% of shares outstanding. This implies that they have majority interest control of the future of the company. Dimensional Fund Advisors LP is the second largest shareholder owning 0.9% of common stock, and Shu Fai So holds about 0.7% of the company stock. Shu Fai So, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.

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 China Merchants Land

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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 China Merchants Land Limited insiders own under 1% of the company. It seems the board members have no more than HK$7.8m worth of shares in the HK$1.2b company. Many tend to prefer to see a board with bigger shareholdings. A good next step might be to take a look at this free summary of insider buying and selling.

General Public Ownership

The general public-- including retail investors -- own 24% stake in the company, and hence can't easily be ignored. While this size of ownership may not be enough to sway a policy decision in their favour, they can still make a collective impact on company policies.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that China Merchants Land is showing 3 warning signs in our investment analysis , you should know about...

Of course this may not be the best stock to buy. So take a peek at this free free list of interesting companies.

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.