Key Insights
- Significant insider control over Huitongda Network implies vested interests in company growth
- 54% of the business is held by the top 3 shareholders
- Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company
Every investor in Huitongda Network Co., Ltd. (HKG:9878) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual insiders with 46% ownership. Put another way, the group faces the maximum upside potential (or downside risk).
As a result, insiders scored the highest last week as the company hit HK$9.9b market cap following a 10% gain in the stock.
Let's take a closer look to see what the different types of shareholders can tell us about Huitongda Network.
Check out our latest analysis for Huitongda Network
What Does The Institutional Ownership Tell Us About Huitongda Network?
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.
We can see that Huitongda Network does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Huitongda Network's historic earnings and revenue below, but keep in mind there's always more to the story.
We note that hedge funds don't have a meaningful investment in Huitongda Network. Jianguo Wang is currently the largest shareholder, with 28% of shares outstanding. For context, the second largest shareholder holds about 13% of the shares outstanding, followed by an ownership of 13% by the third-largest shareholder. Xiuxian Xu, who is the third-largest shareholder, also happens to hold the title of Member of the Board of Directors.
After doing some more digging, we found that the top 3 shareholders collectively control more than half of the company's shares, implying that they have considerable power to influence the company's decisions.
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 are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of Huitongda Network
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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
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 Huitongda Network Co., Ltd.. It has a market capitalization of just HK$9.9b, and insiders have HK$4.6b worth of shares in their own names. That's quite significant. Most would be pleased to see the board is investing alongside them. You may wish to access this free chart showing recent trading by insiders.
General Public Ownership
The general public-- including retail investors -- own 29% 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
We can see that Private Companies own 15%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company.
Public Company Ownership
We can see that public companies hold 3.5% of the Huitongda Network shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
It's always worth thinking about the different groups who own shares in a company. But to understand Huitongda Network better, we need to consider many other factors. For instance, we've identified 1 warning sign for Huitongda Network that you should be aware of.
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.