Do Insiders Own Lots Of Shares In Xinyi Energy Holdings Limited (HKG:3868)?

By
Simply Wall St
Published
January 09, 2022
SEHK:3868
Source: Shutterstock

Every investor in Xinyi Energy Holdings Limited (HKG:3868) 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. I generally like to see some degree of insider ownership, even if only a little. As Nassim Nicholas Taleb said, 'Don’t tell me what you think, tell me what you have in your portfolio.

Xinyi Energy Holdings is a pretty big company. It has a market capitalization of HK$28b. Normally institutions would own a significant portion of a company this size. Taking a look at our data on the ownership groups (below), it seems that institutions own shares in the company. Let's delve deeper into each type of owner, to discover more about Xinyi Energy Holdings.

View our latest analysis for Xinyi Energy Holdings

ownership-breakdown
SEHK:3868 Ownership Breakdown January 9th 2022

What Does The Institutional Ownership Tell Us About Xinyi Energy 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.

We can see that Xinyi Energy Holdings does have institutional investors; and they hold a good portion of the company's 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. 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 Xinyi Energy Holdings' earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
SEHK:3868 Earnings and Revenue Growth January 9th 2022

We note that hedge funds don't have a meaningful investment in Xinyi Energy Holdings. Xinyi Glass Holdings Limited is currently the largest shareholder, with 56% of shares outstanding. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 9.8% and 3.3%, of the shares outstanding, respectively. Ching Sai Tung, who is the third-largest shareholder, also happens to hold the title of Vice Chairman.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. 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 Xinyi Energy Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.

It seems insiders own a significant proportion of Xinyi Energy Holdings Limited. It is very interesting to see that insiders have a meaningful HK$5.8b stake in this HK$28b 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

With a 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Xinyi Energy 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.

Public Company Ownership

We can see that public companies hold 56% of the Xinyi Energy Holdings shares on issue. 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:

It's always worth thinking about the different groups who own shares in a company. But to understand Xinyi Energy Holdings better, we need to consider many other factors. Be aware that Xinyi Energy Holdings is showing 1 warning sign in our investment analysis , you should know about...

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its 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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