OneConnect Financial Technology Co., Ltd.'s (HKG:6638) stock price dropped 14% last week; private companies would not be happy

Key Insights

• The considerable ownership by private companies in OneConnect Financial Technology indicates that they collectively have a greater say in management and business strategy
• A total of 3 investors have a majority stake in the company with 65% ownership
• Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company

If you want to know who really controls OneConnect Financial Technology Co., Ltd. (HKG:6638), then you'll have to look at the makeup of its share registry. We can see that private companies own the lion's share in the company with 33% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 14% decline in share price, private companies suffered the most losses.

Let's take a closer look to see what the different types of shareholders can tell us about OneConnect Financial Technology.

Check out our latest analysis for OneConnect Financial Technology

What Does The Institutional Ownership Tell Us About OneConnect Financial Technology?

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.

We can see that OneConnect Financial Technology does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. 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 OneConnect Financial Technology'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 OneConnect Financial Technology. The company's largest shareholder is Ping An Insurance (Group) Company of China, Ltd., with ownership of 32%. For context, the second largest shareholder holds about 17% of the shares outstanding, followed by an ownership of 16% by the third-largest shareholder.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of OneConnect Financial Technology

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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 information suggests that OneConnect Financial Technology Co., Ltd. insiders own under 1% of the company. But they may have an indirect interest through a corporate structure that we haven't picked up on. It has a market capitalization of just HK$1.9b, and the board has only HK$2.2m worth of shares in their own names. We generally like to see a board more invested. However it might be worth checking if those insiders have been buying.

General Public Ownership

With a 29% ownership, the general public, mostly comprising of individual investors, have some degree of sway over OneConnect Financial Technology. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 33%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Public Company Ownership

We can see that public companies hold 32% of the OneConnect Financial Technology 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 OneConnect Financial Technology better, we need to consider many other factors. For instance, we've identified 2 warning signs for OneConnect Financial Technology that you should be aware of.

If you would prefer discover what analysts are predicting in terms of future growth, do not miss this free report on analyst forecasts.

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.