Key Insights
- Kinetic Development Group's significant insider ownership suggests inherent interests in company's expansion
- Liang Zhang owns 63% of the company
- Recent purchases by insiders
Every investor in Kinetic Development Group Limited (HKG:1277) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 74% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
It's interesting to note that insiders have been buying shares recently. However, with shares price down 5.1% last week, they must be disappointed.
In the chart below, we zoom in on the different ownership groups of Kinetic Development Group.
Check out our latest analysis for Kinetic Development Group
What Does The Lack Of Institutional Ownership Tell Us About Kinetic Development Group?
Institutional investors often avoid companies that are too small, too illiquid or too risky for their tastes. But it's unusual to see larger companies without any institutional investors.
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. Kinetic Development Group's earnings and revenue track record (below) may not be compelling to institutional investors -- or they simply might not have looked at the business closely.
We note that hedge funds don't have a meaningful investment in Kinetic Development Group. The company's largest shareholder is Liang Zhang, with ownership of 63%. This essentially means that they have extensive influence, if not outright control, over the future of the corporation. Meanwhile, the second and third largest shareholders, hold 11% and 0.2%, of the shares outstanding, respectively.
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. As far as we can tell there isn't analyst coverage of the company, so it is probably flying under the radar.
Insider Ownership Of Kinetic Development Group
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.
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 that insiders own more than half the Kinetic Development Group Limited stock. This gives them a lot of power. Given it has a market cap of HK$13b, that means insiders have a whopping HK$9.4b worth of shares in their own names. Most would be pleased to see the board is investing alongside them. You may wish to discover if they have been buying or selling.
General Public Ownership
The general public-- including retail investors -- own 25% stake in the company, and hence can't easily be ignored. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Kinetic Development Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Kinetic Development Group you should be aware of.
Of course this may not be the best stock to buy. Therefore, you may wish to see our free collection of interesting prospects boasting favorable financials.
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.