What Is The Ownership Structure Like For CooTek (Cayman) Inc. (NYSE:CTK)?

By
Simply Wall St
Published
February 24, 2021
NYSE:CTK

A look at the shareholders of CooTek (Cayman) Inc. (NYSE:CTK) can tell us which group is most powerful. Institutions will often hold stock in bigger companies, and we expect to see insiders owning a noticeable percentage of the smaller ones. Warren Buffett said that he likes "a business with enduring competitive advantages that is run by able and owner-oriented people." So it's nice to see some insider ownership, because it may suggest that management is owner-oriented.

CooTek (Cayman) is not a large company by global standards. It has a market capitalization of US$347m, which means it wouldn't have the attention of many institutional investors. In the chart below, we can see that institutions don't own many shares in the company. We can zoom in on the different ownership groups, to learn more about CooTek (Cayman).

View our latest analysis for CooTek (Cayman)

ownership-breakdown
NYSE:CTK Ownership Breakdown February 24th 2021

What Does The Institutional Ownership Tell Us About CooTek (Cayman)?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

Institutions have a very small stake in CooTek (Cayman). That indicates that the company is on the radar of some funds, but it isn't particularly popular with professional investors at the moment. If the business gets stronger from here, we could see a situation where more institutions are keen to buy. When multiple institutional investors want to buy shares, we often see a rising share price. The past revenue trajectory (shown below) can be an indication of future growth, but there are no guarantees.

earnings-and-revenue-growth
NYSE:CTK Earnings and Revenue Growth February 24th 2021

CooTek (Cayman) is not owned by hedge funds. Our data shows that Sequoia Capital China Fund is the largest shareholder with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 18% and 14% of the stock. Furthermore, CEO Jia Liang Wang is the owner of 6.1% of the company's shares.

To make our study more interesting, we found that the top 3 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 is some analyst coverage of the stock, but it could still become more well known, with time.

Insider Ownership Of CooTek (Cayman)

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.

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.

It seems insiders own a significant proportion of CooTek (Cayman) Inc.. It has a market capitalization of just US$347m, and insiders have US$89m worth of shares in their own names. I would say this shows alignment with shareholders, but it is worth noting that the company is still quite small; some insiders may have founded the business. You can click here to see if those insiders have been buying or selling.

General Public Ownership

The general public holds a 20% stake in CooTek (Cayman). 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.

Private Equity Ownership

Private equity firms hold a 51% stake in CooTek (Cayman). This suggests they can be influential in key policy decisions. Some investors might be encouraged by this, since private equity are sometimes able to encourage strategies that help the market see the value in the company. Alternatively, those holders might be exiting the investment after taking it public.

Next Steps:

It's always worth thinking about the different groups who own shares in a company. But to understand CooTek (Cayman) better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for CooTek (Cayman) (of which 1 can't be ignored!) you should know about.

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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This article by Simply Wall St is general in nature. 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.
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