Do Insiders Own Lots Of Shares In BOE Varitronix Limited (HKG:710)?

By
Simply Wall St
Published
February 16, 2021
SEHK:710

A look at the shareholders of BOE Varitronix Limited (HKG:710) can tell us which group is most powerful. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of 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.

BOE Varitronix is not a large company by global standards. It has a market capitalization of HK$3.2b, which means it wouldn't have the attention of many 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 BOE Varitronix.

Check out our latest analysis for BOE Varitronix

ownership-breakdown
SEHK:710 Ownership Breakdown February 17th 2021

What Does The Institutional Ownership Tell Us About BOE Varitronix?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

Less than 5% of BOE Varitronix is held by institutional investors. This suggests that some funds have the company in their sights, but many have not yet bought shares in it. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

earnings-and-revenue-growth
SEHK:710 Earnings and Revenue Growth February 17th 2021

Hedge funds don't have many shares in BOE Varitronix. The company's largest shareholder is BOE Technology Group Company Limited, with ownership of 54%. This implies that they have majority interest control of the future of the company. With 6.9% and 1.7% of the shares outstanding respectively, Chun-Shun Ko and Dimensional Fund Advisors L.P. are the second and third largest shareholders.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. As far I can tell there isn't analyst coverage of the company, so it is probably flying under the radar.

Insider Ownership Of BOE Varitronix

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.

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.

Shareholders would probably be interested to learn that insiders own shares in BOE Varitronix Limited. In their own names, insiders own HK$221m worth of stock in the HK$3.2b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, with a 35% stake in the company, will not 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.

Public Company Ownership

We can see that public companies hold 54% of the BOE Varitronix shares on issue. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand BOE Varitronix better, we need to consider many other factors. Be aware that BOE Varitronix is showing 2 warning signs in our investment analysis , and 1 of those is concerning...

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.

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This article by Simply Wall St is general in nature. 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.
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