Key Insights
- Fulu Holdings' significant insider ownership suggests inherent interests in company's expansion
- The top 2 shareholders own 51% of the company
- Using data from company's past performance alongside ownership research, one can better assess the future performance of a company
Every investor in Fulu Holdings Limited (HKG:2101) should be aware of the most powerful shareholder groups. The group holding the most number of shares in the company, around 54% to be precise, is individual insiders. Put another way, the group faces the maximum upside potential (or downside risk).
And last week, insiders endured the biggest losses as the stock fell by 15%.
Let's delve deeper into each type of owner of Fulu Holdings, beginning with the chart below.
Check out our latest analysis for Fulu Holdings
What Does The Lack Of Institutional Ownership Tell Us About Fulu Holdings?
We don't tend to see institutional investors holding stock of companies that are very risky, thinly traded, or very small. Though we do sometimes see large companies without institutions on the register, it's not particularly common.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company. It is also possible that fund managers don't own the stock because they aren't convinced it will perform well. Fulu Holdings might not have the sort of past performance institutions are looking for, or perhaps they simply have not studied the business closely.
Fulu Holdings is not owned by hedge funds. With a 38% stake, CEO Xi Fu is the largest shareholder. In comparison, the second and third largest shareholders hold about 13% and 12% of the stock. Interestingly, the third-largest shareholder, Yuguo Zhang is also a Member of the Board of Directors, again, indicating strong insider ownership amongst the company's top shareholders.
After doing some more digging, we found that the top 2 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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. Our information suggests that there isn't any analyst coverage of the stock, so it is probably little known.
Insider Ownership Of Fulu Holdings
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. 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.
Our information suggests that insiders own more than half of Fulu Holdings Limited. This gives them effective control of the company. Given it has a market cap of HK$817m, that means they have HK$441m worth of shares. Most would argue this is a positive, showing strong alignment with shareholders. You can click here to see if those insiders have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 33% stake in the company, and hence can't easily be ignored. 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 Company Ownership
It seems that Private Companies own 13%, of the Fulu Holdings stock. 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:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Take risks for example - Fulu Holdings has 2 warning signs we think you should be aware of.
Of course this may not be the best stock to buy. So take a peek at this free 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.