Private companies invested in BOE Varitronix Limited (HKG:710) copped the brunt of last week's HK$420m market cap decline

Key Insights

• The considerable ownership by private companies in BOE Varitronix indicates that they collectively have a greater say in management and business strategy
• Beijing Electronics Holding Co.,Ltd owns 53% of the company
• 17% of BOE Varitronix is held by Institutions

If you want to know who really controls BOE Varitronix Limited (HKG:710), then you'll have to look at the makeup of its share registry. With 53% stake, private companies possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And following last week's 8.9% decline in share price, private companies suffered the most losses.

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

View our latest analysis for BOE Varitronix

What Does The Institutional Ownership Tell Us About BOE Varitronix?

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 BOE Varitronix does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at BOE Varitronix's earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in BOE Varitronix. The company's largest shareholder is Beijing Electronics Holding Co.,Ltd, with ownership of 53%. This implies that they have majority interest control of the future of the company. With 10% and 1.8% of the shares outstanding respectively, China Orient Asset Management (International) Holding Limited and The Vanguard Group, Inc. are the second and third largest shareholders.

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 BOE Varitronix

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 data suggests that insiders own under 1% of BOE Varitronix Limited in their own names. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. It appears that the board holds about HK$16m worth of stock. This compares to a market capitalization of HK$4.3b. Many investors in smaller companies prefer to see the board more heavily invested. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public-- including retail investors -- own 29% stake in the company, and hence can't easily be ignored. 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.

Private Company Ownership

It seems that Private Companies own 53%, of the BOE Varitronix stock. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand BOE Varitronix better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with BOE Varitronix .

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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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.