Stock Analysis

How Much Of Zhongliang Holdings Group Company Limited (HKG:2772) Do Insiders Own?

SEHK:2772
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The big shareholder groups in Zhongliang Holdings Group Company Limited (HKG:2772) have power over the company. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

With a market capitalization of HK$18b, Zhongliang Holdings Group is a decent size, so it is probably on the radar of institutional investors. In the chart below, we can see that institutions are not really that prevalent on the share registry. We can zoom in on the different ownership groups, to learn more about Zhongliang Holdings Group.

See our latest analysis for Zhongliang Holdings Group

ownership-breakdown
SEHK:2772 Ownership Breakdown December 29th 2020

What Does The Lack Of Institutional Ownership Tell Us About Zhongliang Holdings Group?

We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.

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. Zhongliang Holdings Group'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.

earnings-and-revenue-growth
SEHK:2772 Earnings and Revenue Growth December 29th 2020

Hedge funds don't have many shares in Zhongliang Holdings Group. Because actions speak louder than words, we consider it a good sign when insiders own a significant stake in a company. In Zhongliang Holdings Group's case, its Top Key Executive, Jian Yang, is the largest shareholder, holding 83% of shares outstanding. For context, the second largest shareholder holds about 0.5% of the shares outstanding, followed by an ownership of 0.2% by the third-largest shareholder.

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 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 Zhongliang Holdings Group

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

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 that insiders own more than half the Zhongliang Holdings Group Company Limited stock. This gives them a lot of power. Given it has a market cap of HK$18b, that means insiders have a whopping HK$15b worth of shares in their own names. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if they have been selling down their stake.

General Public Ownership

The general public holds a 16% stake in Zhongliang Holdings Group. 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. For example, we've discovered 3 warning signs for Zhongliang Holdings Group (2 are potentially serious!) that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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