Edvance International Holdings Limited's (HKG:1410) market cap dropped HK$192m last week; Private companies bore the brunt

Key Insights

• The considerable ownership by private companies in Edvance International Holdings indicates that they collectively have a greater say in management and business strategy
• Success Vision International Group Limited owns 56% of the company
• 10% of Edvance International Holdings is held by insiders

A look at the shareholders of Edvance International Holdings Limited (HKG:1410) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As a result, private companies as a group endured the highest losses last week after market cap fell by HK$192m.

Let's take a closer look to see what the different types of shareholders can tell us about Edvance International Holdings.

View our latest analysis for Edvance International Holdings

What Does The Lack Of Institutional Ownership Tell Us About Edvance International Holdings?

Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.

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. Alternatively, there might be something about the company that has kept institutional investors away. Edvance International Holdings' earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.

We note that hedge funds don't have a meaningful investment in Edvance International Holdings. Our data shows that Success Vision International Group Limited is the largest shareholder with 56% of shares outstanding. This implies that they have majority interest control of the future of the company. Meanwhile, the second and third largest shareholders, hold 5.9% and 2.2%, of the shares outstanding, respectively. Interestingly, the bottom two of the top three shareholders also hold the title of Chief Operating Officer and Member of the Board of Directors, respectively, suggesting that these insiders have a personal stake in 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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.

Insider Ownership Of Edvance International Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

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 insiders own a significant proportion of Edvance International Holdings Limited. Insiders own HK$101m worth of shares in the HK$1.0b company. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 34% 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

Our data indicates that Private Companies hold 56%, of the company's shares. 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.

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. Take risks for example - Edvance International Holdings has 1 warning sign we think you should be aware of.

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. 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.