The recent 10% gain must have brightened CEO Jialin Li's week, VSTECS Holdings Limited's (HKG:856) most bullish insider

Key Insights

• Insiders appear to have a vested interest in VSTECS Holdings' growth, as seen by their sizeable ownership
• The top 3 shareholders own 64% of the company
• 27% of VSTECS Holdings is held by Institutions

If you want to know who really controls VSTECS Holdings Limited (HKG:856), then you'll have to look at the makeup of its share registry. The group holding the most number of shares in the company, around 42% to be precise, is individual insiders. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

As a result, insiders scored the highest last week as the company hit HK$6.7b market cap following a 10% gain in the stock.

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

See our latest analysis for VSTECS Holdings

What Does The Institutional Ownership Tell Us About VSTECS Holdings?

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.

We can see that VSTECS Holdings 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. 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 VSTECS Holdings' historic earnings and revenue below, but keep in mind there's always more to the story.

Hedge funds don't have many shares in VSTECS Holdings. Looking at our data, we can see that the largest shareholder is the CEO Jialin Li with 27% of shares outstanding. With 19% and 18% of the shares outstanding respectively, FMR LLC and Eternal Asia Supply Chain Management Ltd. are the second and third largest shareholders.

To make our study more interesting, we found that the top 3 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. While there is some analyst coverage, the company is probably not widely covered. So it could gain more attention, down the track.

Insider Ownership Of VSTECS 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.

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.

It seems insiders own a significant proportion of VSTECS Holdings Limited. It has a market capitalization of just HK$6.7b, and insiders have HK$2.8b worth of shares in their own names. This may suggest that the founders still own a lot of shares. You can click here to see if they have been buying or selling.

General Public Ownership

The general public, who are usually individual investors, hold a 13% stake in VSTECS Holdings. 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

Public companies currently own 18% of VSTECS Holdings stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. For example, we've discovered 2 warning signs for VSTECS Holdings (1 can't be ignored!) that you should be aware of before investing here.

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

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.