Xunlei Limited's (NASDAQ:XNET) last week's 14% decline must have disappointed private companies who have a significant stake

Key Insights

• Xunlei's significant private companies ownership suggests that the key decisions are influenced by shareholders from the larger public
• A total of 2 investors have a majority stake in the company with 50% ownership
• Insider ownership in Xunlei is 14%

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A look at the shareholders of Xunlei Limited (NASDAQ:XNET) can tell us which group is most powerful. And the group that holds the biggest piece of the pie are private companies with 43% ownership. Put another way, the group faces the maximum upside potential (or downside risk).

And following last week's 14% decline in share price, private companies suffered the most losses.

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

See our latest analysis for Xunlei

What Does The Institutional Ownership Tell Us About Xunlei?

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.

Xunlei 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. 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 Xunlei's earnings history below. Of course, the future is what really matters.

We note that hedge funds don't have a meaningful investment in Xunlei. Our data shows that Itui International Inc. is the largest shareholder with 43% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.4% and 4.3%, of the shares outstanding, respectively. Yubo Zhang, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors. Furthermore, CEO Jinbo Li is the owner of 2.1% of the company's shares.

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 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. We're not picking up on any analyst coverage of the stock at the moment, so the company is unlikely to be widely held.

Insider Ownership Of Xunlei

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. 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 Xunlei Limited. It has a market capitalization of just US$295m, and insiders have US$41m worth of shares in their own names. It is great to see insiders so invested in the business. It might be worth checking if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Xunlei. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Company Ownership

We can see that Private Companies own 43%, of the shares on issue. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with Xunlei .

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.