Xuan Wu Cloud Technology Holdings Limited's (HKG:2392) most bullish insider, CEO Yonghui Chen must be pleased with the recent 14% gain

Key Insights

• Insiders appear to have a vested interest in Xuan Wu Cloud Technology Holdings' growth, as seen by their sizeable ownership
• A total of 4 investors have a majority stake in the company with 56% ownership
• Ownership research, combined with past performance data can help provide a good understanding of opportunities in a stock

A look at the shareholders of Xuan Wu Cloud Technology Holdings Limited (HKG:2392) can tell us which group is most powerful. The group holding the most number of shares in the company, around 60% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Clearly, insiders benefitted the most after the company's market cap rose by HK$118m last week.

Let's delve deeper into each type of owner of Xuan Wu Cloud Technology Holdings, beginning with the chart below.

View our latest analysis for Xuan Wu Cloud Technology Holdings

What Does The Lack Of Institutional Ownership Tell Us About Xuan Wu Cloud Technology Holdings?

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 many reasons why a company might not have any institutions on the share registry. It may be hard for institutions to buy large amounts of shares, if liquidity (the amount of shares traded each day) is low. If the company has not needed to raise capital, institutions might lack the opportunity to build a position. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Xuan Wu Cloud Technology Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.

Hedge funds don't have many shares in Xuan Wu Cloud Technology Holdings. The company's CEO Yonghui Chen is the largest shareholder with 18% of shares outstanding. In comparison, the second and third largest shareholders hold about 16% and 12% of the stock. Interestingly, the third-largest shareholder, Fangjie Huang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 56% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Xuan Wu Cloud Technology Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our information suggests that insiders own more than half of Xuan Wu Cloud Technology Holdings Limited. This gives them effective control of the company. That means they own HK$573m worth of shares in the HK$953m company. That's quite meaningful. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 21% stake in Xuan Wu Cloud Technology 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

Our data indicates that Private Companies hold 5.5%, of the company's shares. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Xuan Wu Cloud Technology Holdings better, we need to consider many other factors. Take risks for example - Xuan Wu Cloud Technology Holdings has 2 warning signs we think you should be aware of.

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.