Xiaomi Corporation (HKG:1810) most popular amongst retail investors who own 48%, insiders hold 33%

Key Insights

• Significant control over Xiaomi by retail investors implies that the general public has more power to influence management and governance-related decisions
• 47% of the business is held by the top 25 shareholders
• Insider ownership in Xiaomi is 33%

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To get a sense of who is truly in control of Xiaomi Corporation (HKG:1810), it is important to understand the ownership structure of the business. We can see that retail investors own the lion's share in the company with 48% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And individual insiders on the other hand have a 33% ownership in the company. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.

Let's delve deeper into each type of owner of Xiaomi, beginning with the chart below.

View our latest analysis for Xiaomi

What Does The Institutional Ownership Tell Us About Xiaomi?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

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. 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 Xiaomi's historic earnings and revenue below, but keep in mind there's always more to the story.

Xiaomi is not owned by hedge funds. The company's CEO Jun Lei is the largest shareholder with 23% of shares outstanding. With 8.8% and 4.2% of the shares outstanding respectively, Bin Lin and BlackRock, Inc. are the second and third largest shareholders. Interestingly, the second-largest shareholder, Bin Lin is also Top Key Executive, again, pointing towards strong insider ownership amongst the company's top shareholders.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

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 a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Xiaomi

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 most recent data indicates that insiders own a reasonable proportion of Xiaomi Corporation. It has a market capitalization of just HK$1.5t, and insiders have HK$478b worth of shares in their own names. That's quite significant. Most would say this shows a good degree of alignment with shareholders, especially in a company of this size. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 48% stake in the company, and hence can't easily be ignored. 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.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Xiaomi better, we need to consider many other factors. For example, we've discovered 1 warning sign for Xiaomi that you should be aware of before investing here.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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.