Could The Kingsoft Cloud Holdings Limited (NASDAQ:KC) Ownership Structure Tell Us Something Useful?

By
Simply Wall St
Published
May 13, 2022
NasdaqGS:KC
Source: Shutterstock

The big shareholder groups in Kingsoft Cloud Holdings Limited (NASDAQ:KC) have power over the company. Generally speaking, as a company grows, institutions will increase their ownership. Conversely, insiders often decrease their ownership over time. Companies that have been privatized tend to have low insider ownership.

Kingsoft Cloud Holdings is not a large company by global standards. It has a market capitalization of US$774m, which means it wouldn't have the attention of many institutional investors. Taking a look at our data on the ownership groups (below), it seems that institutional investors have bought into the company. Let's delve deeper into each type of owner, to discover more about Kingsoft Cloud Holdings.

See our latest analysis for Kingsoft Cloud Holdings

ownership-breakdown
NasdaqGS:KC Ownership Breakdown May 13th 2022

What Does The Institutional Ownership Tell Us About Kingsoft Cloud Holdings?

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 Kingsoft Cloud 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. 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 Kingsoft Cloud Holdings, (below). Of course, keep in mind that there are other factors to consider, too.

earnings-and-revenue-growth
NasdaqGS:KC Earnings and Revenue Growth May 13th 2022

We note that hedge funds don't have a meaningful investment in Kingsoft Cloud Holdings. Kingsoft Corporation Limited is currently the company's largest shareholder with 39% of shares outstanding. For context, the second largest shareholder holds about 12% of the shares outstanding, followed by an ownership of 5.6% by the third-largest shareholder. In addition, we found that Yulin Wang, the CEO has 1.3% of the shares allocated to their name.

A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 51% stake.

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. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.

Insider Ownership Of Kingsoft Cloud 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.

We can see that insiders own shares in Kingsoft Cloud Holdings Limited. In their own names, insiders own US$12m worth of stock in the US$774m 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 14% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Kingsoft Cloud Holdings. 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.

Public Company Ownership

It appears to us that public companies own 51% of Kingsoft Cloud Holdings. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand Kingsoft Cloud Holdings better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 3 warning signs with Kingsoft Cloud Holdings , and understanding them should be part of your investment process.

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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