Xiaomi Corporation's (HKG:1810) stock price dropped 5.3% last week; individual investors would not be happy

September 03, 2022
  •  Updated
November 14, 2022
SEHK:1810
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A look at the shareholders of Xiaomi Corporation (HKG:1810) can tell us which group is most powerful. The group holding the most number of shares in the company, around 46% to be precise, is individual investors. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Following a 5.3% decrease in the stock price last week, individual investors suffered the most losses, but insiders who own 35% stock also took a hit.

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

Check out our latest analysis for Xiaomi

ownership-breakdown
SEHK:1810 Ownership Breakdown September 3rd 2022

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.

Xiaomi already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. 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.

earnings-and-revenue-growth
SEHK:1810 Earnings and Revenue Growth September 3rd 2022

We note that hedge funds don't have a meaningful investment in Xiaomi. With a 26% stake, CEO Jun Lei is the largest shareholder. With 9.4% and 2.5% 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.

After doing some more digging, we found that the top 15 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. 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

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. 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.

Our most recent data indicates that insiders own a reasonable proportion of Xiaomi Corporation. It is very interesting to see that insiders have a meaningful HK$97b stake in this HK$278b 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 46% stake in Xiaomi. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

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. Take risks for example - Xiaomi has 2 warning signs (and 1 which is concerning) we think you should know about.

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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