Public companies in Cheetah Mobile Inc. (NYSE:CMCM) are its biggest bettors, and their bets paid off as stock gained 13% last week

Key Insights

• Significant control over Cheetah Mobile by public companies implies that the general public has more power to influence management and governance-related decisions
• 60% of the business is held by the top 2 shareholders
• Insiders own 13% of Cheetah Mobile

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To get a sense of who is truly in control of Cheetah Mobile Inc. (NYSE:CMCM), it is important to understand the ownership structure of the business. With 60% stake, public companies possess the maximum shares in the company. Put another way, the group faces the maximum upside potential (or downside risk).

As a result, public companies were the biggest beneficiaries of last week’s 13% gain.

Let's delve deeper into each type of owner of Cheetah Mobile, beginning with the chart below.

See our latest analysis for Cheetah Mobile

What Does The Institutional Ownership Tell Us About Cheetah Mobile?

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.

Since institutions own only a small portion of Cheetah Mobile, many may not have spent much time considering the stock. But it's clear that some have; and they liked it enough to buy in. So if the company itself can improve over time, we may well see more institutional buyers in the future. We sometimes see a rising share price when a few big institutions want to buy a certain stock at the same time. The history of earnings and revenue, which you can see below, could be helpful in considering if more institutional investors will want the stock. Of course, there are plenty of other factors to consider, too.

We note that hedge funds don't have a meaningful investment in Cheetah Mobile. Kingsoft Corporation Limited is currently the largest shareholder, with 45% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 16% and 7.9%, of the shares outstanding, respectively. Sheng Fu, who is the third-largest shareholder, also happens to hold the title of Chairman of the Board.

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.

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. There is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of Cheetah Mobile

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. 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.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our information suggests that insiders maintain a significant holding in Cheetah Mobile Inc.. It has a market capitalization of just US$155m, and insiders have US$20m 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

With a 25% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cheetah Mobile. 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 60% of the Cheetah Mobile shares on issue. 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 Cheetah Mobile better, we need to consider many other factors.

I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.

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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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.