Stock Analysis

Insiders own 35% of Xiaomi Corporation (HKG:1810) shares but individual investors control 48% of the company

SEHK:1810
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Key Insights

  • Xiaomi's significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
  • The top 25 shareholders own 49% of the company
  • Insiders own 35% of Xiaomi

Every investor in Xiaomi Corporation (HKG:1810) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Individual insiders, on the other hand, account for 35% of the company's stockholders. Insiders often own a large chunk of younger, smaller, companies while huge companies tend to have institutions as shareholders.

In the chart below, we zoom in on the different ownership groups of Xiaomi.

View our latest analysis for Xiaomi

ownership-breakdown
SEHK:1810 Ownership Breakdown January 1st 2024

What Does The Institutional Ownership Tell Us About Xiaomi?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Xiaomi. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of Xiaomi, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SEHK:1810 Earnings and Revenue Growth January 1st 2024

We note that hedge funds don't have a meaningful investment in Xiaomi. The company's CEO Jun Lei is the largest shareholder with 24% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 9.1% and 2.4%, of the shares outstanding, respectively. Interestingly, the second-largest shareholder, Bin Lin is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

On studying our ownership data, we found that 25 of the top shareholders collectively own less than 50% of the share register, implying that no single individual has a majority interest.

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 plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.

Insider Ownership Of Xiaomi

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.

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.

It seems insiders own a significant proportion of Xiaomi Corporation. It is very interesting to see that insiders have a meaningful HK$136b stake in this HK$391b business. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 48% stake in Xiaomi. 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:

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. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Xiaomi you should know about.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.

Valuation is complex, but we're helping make it simple.

Find out whether Xiaomi is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.