Could The PAX Global Technology Limited (HKG:327) Ownership Structure Tell Us Something Useful?

Every investor in PAX Global Technology Limited (HKG:327) should be aware of the most powerful shareholder groups. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that used to be publicly owned tend to have lower insider ownership.

PAX Global Technology is not a large company by global standards. It has a market capitalization of HK$3.6b, which means it wouldn’t have the attention of many institutional investors. Our analysis of the ownership of the company, below, shows that institutions own shares in the company. Let’s take a closer look to see what the different types of shareholder can tell us about 327.

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View our latest analysis for PAX Global Technology

SEHK:327 Ownership Summary, May 21st 2019
SEHK:327 Ownership Summary, May 21st 2019

What Does The Institutional Ownership Tell Us About PAX Global Technology?

Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.

We can see that PAX Global Technology does have institutional investors; and they hold 39% of the stock. 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 PAX Global Technology’s historic earnings and revenue, below, but keep in mind there’s always more to the story.

SEHK:327 Income Statement, May 21st 2019
SEHK:327 Income Statement, May 21st 2019

It would appear that 7.0% of PAX Global Technology shares are controlled by hedge funds. That worth noting, since hedge funds are often quite active investors, who may try to influence management. Many want to see value creation (and a higher share price) in the short term or medium term. 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 PAX Global Technology

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

I can report that insiders do own shares in PAX Global Technology Limited. In their own names, insiders own HK$52m worth of stock in the HK$3.6b company. This shows at least some alignment. You can click here to see if those insiders have been buying or selling.

General Public Ownership

With a 20% ownership, the general public have some degree of sway over 327. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.

Public Company Ownership

We can see that public companies hold 33%, of the 327 shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important.

I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow, for free .

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.