Private companies in China Merchants Commercial Real Estate Investment Trust (HKG:1503) are its biggest bettors, and their bets paid off as stock gained 12% last week

Key Insights

• Significant control over China Merchants Commercial Real Estate Investment Trust by private companies implies that the general public has more power to influence management and governance-related decisions
• A total of 3 investors have a majority stake in the company with 61% ownership
• Institutions own 13% of China Merchants Commercial Real Estate Investment Trust

If you want to know who really controls China Merchants Commercial Real Estate Investment Trust (HKG:1503), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 48% to be precise, is private companies. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, private companies collectively scored the highest last week as the company hit HK$1.4b market cap following a 12% gain in the stock.

Let's delve deeper into each type of owner of China Merchants Commercial Real Estate Investment Trust, beginning with the chart below.

View our latest analysis for China Merchants Commercial Real Estate Investment Trust

What Does The Institutional Ownership Tell Us About China Merchants Commercial Real Estate Investment Trust?

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.

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

Hedge funds don't have many shares in China Merchants Commercial Real Estate Investment Trust. The company's largest shareholder is China Merchants Group Limited, with ownership of 35%. The second and third largest shareholders are Pacific Asset Management Co., Ltd. and K.Wah Group, with an equal amount of shares to their name at 13%.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 61% stake.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of China Merchants Commercial Real Estate Investment Trust

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own less than 1% of China Merchants Commercial Real Estate Investment Trust. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about HK$230k worth of stock. This compares to a market capitalization of HK$1.4b. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

The general public-- including retail investors -- own 38% 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.

Private Company Ownership

It seems that Private Companies own 48%, of the China Merchants Commercial Real Estate Investment Trust 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:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that China Merchants Commercial Real Estate Investment Trust is showing 3 warning signs in our investment analysis , and 2 of those are a bit unpleasant...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this 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.