Following recent decline, Futu Holdings Limited's (NASDAQ:FUTU) top shareholder CEO Hua Li sees holdings value drop by 19%

By
Simply Wall St
Published
December 01, 2021
NasdaqGM:FUTU
Source: Shutterstock

Every investor in Futu Holdings Limited (NASDAQ:FUTU) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 34% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

And last week, insiders endured the biggest losses as the stock fell by 19%.

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

View our latest analysis for Futu Holdings

ownership-breakdown
NasdaqGM:FUTU Ownership Breakdown December 2nd 2021

What Does The Institutional Ownership Tell Us About Futu 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.

Futu Holdings already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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. 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 Futu Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGM:FUTU Earnings and Revenue Growth December 2nd 2021

We note that hedge funds don't have a meaningful investment in Futu Holdings. The company's CEO Hua Li is the largest shareholder with 34% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 21% and 4.3%, of the shares outstanding, respectively.

To make our study more interesting, we found that the top 2 shareholders have a majority ownership in the company, meaning that they are powerful enough to influence the decisions of the company.

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 Futu Holdings

While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.

Our most recent data indicates that insiders own a reasonable proportion of Futu Holdings Limited. Insiders own US$2.4b worth of shares in the US$7.0b company. That's quite meaningful. 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 20% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Futu 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

It appears to us that public companies own 21% of Futu Holdings. 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 Futu Holdings better, we need to consider many other factors. For instance, we've identified 3 warning signs for Futu Holdings that you should be aware of.

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

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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