Insiders of AAC Technologies Holdings Inc. (HKG:2018) must be disappointed as stock fell 19% after recent purchases

By
Simply Wall St
Published
January 23, 2022
SEHK:2018
Source: Shutterstock

Every investor in AAC Technologies Holdings Inc. (HKG:2018) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 44% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

And looking at our data, we can see that insiders have bought shares recently. Their expectations, however, were not satisfied, as the market cap dropped to HK$32b over the past week.

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

See our latest analysis for AAC Technologies Holdings

ownership-breakdown
SEHK:2018 Ownership Breakdown January 23rd 2022

What Does The Institutional Ownership Tell Us About AAC Technologies Holdings?

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 AAC Technologies Holdings. 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. 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 AAC Technologies Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
SEHK:2018 Earnings and Revenue Growth January 23rd 2022

AAC Technologies Holdings is not owned by hedge funds. Our data shows that Chun Yuan Wu is the largest shareholder with 22% of shares outstanding. With 19% and 9.2% of the shares outstanding respectively, Zhengmin Pan and JPMorgan Chase & Co, Private Banking and Investment Banking Investments are the second and third largest shareholders. Zhengmin Pan, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.

A more detailed study of the shareholder registry showed us that 3 of the top shareholders have a considerable amount of ownership in the company, via their 50% stake.

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

Insider Ownership Of AAC Technologies Holdings

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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.

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.

Our most recent data indicates that insiders own a reasonable proportion of AAC Technologies Holdings Inc.. Insiders own HK$14b worth of shares in the HK$32b company. That's quite meaningful. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.

General Public Ownership

With a 27% ownership, the general public, mostly comprising of individual investors, have some degree of sway over AAC Technologies Holdings. 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:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with AAC Technologies Holdings , and understanding them should be part of your investment process.

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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